Guidance Note On Secretarial Audit-Word

GUIDANCE NOTE
ON
SECRETARIAL AUDIT
(Release 1.2)
Release 1.2 : March 2015
Price : Rs. 500
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(ii)
PREFACE
Governments, financial institutions, banks and companies all have realized that the corporate
compliant regime lies not in the adequacy of legislations but in its implementation and compliance.
Enactment of various laws is not enough and the desired results cannot be achieved unless their
implementation is geared up.
The frauds and scams, which have been detrimental not only to growth of financial market but have
been a set back to the economy as a whole, have occurred in the past despite and inspite of having
plethora of legislations.
Realising the need to ensure compliance of laws in letter and spirit on continuous basis by an
independent professional, the Companies Act, 2013 mandated the carrying out of secretarial audit
for bigger companies.
The multiplicity of laws, rules, regulations, etc. has necessitated introduction of a secretarial audit
to ensure compliances of laws applicable to a company. This has a two-fold objective:
(a) Firstly, to protect the interests of all the stakeholders;
(b) Secondly, to have effective compliance system and governance process.
Secretarial Audit is a mechanism which gives necessary comfort to the management, regulators and
the stakeholders, as to the compliance by the company of applicable laws and the existence of
proper and adequate systems and processes.
The Legislature has entrusted company secretaries in practice with this responsibility of
conducting secretarial audit. The powers and duties of auditors is mutatis mutandis applicable to
the company secretary in practice conducting secretarial audit.
This Guidance note (Revised edition) highlights the meaning, benefits, process, approach and scope
of Secretarial audit, and professional responsibility for incorrect audit report. This guidance note
also provides checklists with respect to five mandatory laws as specified in Form MR-3. It also has a
chapter on Secretarial standards, board processes and specimen Secretarial Audit Report.
I am confident that this publication will prove to be of immense practical value to professionals
while carrying out the secretarial audit.
I commend the dedicated efforts put in by the ICSI team led by CS Alka Kapoor, Joint Secretary and
comprising CS Banu Dandona, CS Lakshmi Arun, Deputy Directors, CS Deepa Khatri, Assistant
Director, Mr. Chittaranjan Pal, CS Khusbu Mohanty and CS Disha Kant, Assistant Education Officers
under the overall guidance of CS Sutanu Sinha, Officiating Secretary & Chief Executive, ICSI and the
guidance and leadership of CS Vineet Chaudhary, Central Council Member and Chairman, Corporate
Laws and Governance Committee.
I place on record my sincere thanks to; CS Mahesh Athavale, Past President ICSI; CS Pavan Kumar
Vijay, Past President, ICSI; CS V Sreedharan, Past Council Member, ICSI; CS Ahalada Rao, Council
Member; CS Ashish Garg, Council Member; Mr. V K Aggarwal, Former Principal Director; CS Henry
Richard, Retd. Regional Director, South Eastern Region, Ministry of Corporate Affairs and Mr. Vinay
Sanduja, Senior Associate, Dua Associates (Advocates & Solicitors) for their valuable inputs.
In any publication, there is always scope for further improvement. I would personally be grateful to
users and readers for offering their suggestions/comments for further refinement.
Date : 27-03-2015 CS Atul Mehta

Place: New Delhi President
The Institute of Company Secretaries of India
(iii)
INDEX
Sl. No. Chapter Page Nos.
1 Secretarial Audit 1
2 Companies Act, 2013 42
3 Capital Market related laws/Rules/Regulations 107
Part A : Securities Contracts (Regulation) Act, 1956 and Rule 107

made thereunder
Part B : Depositories Act, 1996 109
Part C : SEBI (Substantial Acquisition of Shares and Takeovers) 110
Regulations, 2011
Part D : SEBI (Prohibition of Insider Trading) Regulations 115
Part E : SEBI (ICDR) Regulations, 2009 122
Part F : Issue of Securities through employee stock option 132
Part G : SEBI (Issue and Listing of Debt Securities) Regulations, 136
2008
Part H : SEBI (Registrar to an Issue and Share Transfer Agents) 144
Regulations, 1993
Part I : SEBI (Delisting of Equity Shares) Regulations, 2009 145
Part J : SEBI (Buyback of Securities) Regulations, 1998 148
Part K : Listing Agreement 151
4 Foreign Direct Investment (FDI) 159
5 Direct Investment by Resident in Joint Venture/Wholly Owned 165

Subsidiary abroad
6 External Commercial Borrowing 171
7 Secretarial Standards under the Companies Act, 2013 174
8 Labour Laws 176
9 Competition Law 192
10 Environmental Laws 199
11 Industry Specific Laws 205
12 Board Processes 212
13 Specimen Qualified Secretarial Audit Report 222
(v)
1
SECRETARIAL AUDIT
Genesis of Secretarial Audit
A corporation has to function within the periphery of host of legislations. It is essential for a
corporation to abide by plethora of applicable laws, rules, procedures, regulations and the internal
regulatory framework.
Under most of the laws, the persons who are responsible for compliance and liable for
punishment for non-compliances are directors, the Company Secretary and officers who have been
designated to ensure compliances of specific laws and regulations applicable to a company.
Under the Companies Act, 2013, a managing and/or whole-time director, along with other Key
Managerial Personnel and other Directors may be treated as ‘officers who are in default’ and will be
liable for penal consequences for non-compliance, while under most of the other laws, persons in
charge of and responsible for the conduct of business of the company are held responsible.
Secretarial Audit is a mechanism which gives necessary comfort to the management, regulators
and the stakeholders, as to the compliance by the company of applicable laws and the existence of
proper and adequate systems and processes.
Secretarial Audit also covers non financial aspects of the business having impact on its business
and performance and verifies compliances of applicable laws, regulations and guidelines.
Nonetheless, this exercise also mitigates business risk to a great extent. It evaluates the manner in
which the affairs of a company are conducted. While pursuing its business activities, the company
has to comply with the rules and regulations relating to the Companies Act, Securities laws, FEMA,
industry specific laws and general laws like Labour Laws, Competition Law and Environmental and
Pollution Related laws.
Secretarial Audit postulates verification on a test basis of records, books, papers and documents
to check compliance with the provisions of various statutes, laws and rules & regulations by a
Company Secretary in Practice to ensure compliance of legal and procedural requirements and
processes.
Secretarial Audit is, therefore, an independent and objective assurance intended to add value
and improve operations of a company. It helps to accomplish the organisation’s objectives by
bringing a systematic, disciplined approach to evaluate and improve effectiveness of risk
management, control, and governance processes.
Recommendation by Parliamentary Standing Committee on Finance
Report of Parliamentary Standing Committee on Finance
Twenty- first report of Standing Committee on Finance on the Companies Bill, 2009 in the year
2009-2010 recommended Secretarial Audit in listed and bigger companies. The extracts from the
Report are as follows:
1 Guidance Note on Secretarial Audit

• “Para 7.8: *****Secretarial Audit may also be mandated for bigger companies, including all listed
companies; as it inter-alia provides necessary assurance to the investors that the affairs of the
Company are being conducted in accordance with the legal requirements;
• Para 10.53: Keeping in view its significance for ensuring procedural compliance by companies,
particularly with regard to various statutory disclosures and to ensure adherence to prescribed
secretarial standards, the Committee recommend that Secretarial Audit report may be required
to be attached with financial statements by companies exceeding certain threshold limit of paid-
up share capital.
• Para 13.33: In accordance with the suggestions made by the Committee to include secretarial
audit for bigger companies, delineation of functions and role of chief financial officer and
company secretary, the Ministry have proposed to include three new sub-clauses 178A, 178B
and 178C in clause 178. Clause 178A, which deals with Secretarial Audit is given below:
— New sub-clause 178A- Provisions to be included in the Bill to mandate Secretarial audit for
bigger companies New Clause 178A-
(1) Every company having a paid up share capital of rupees five crore or more or such other
amount as may be prescribed by Central Government from time to time shall annex with
its Board‘s Report made in terms of sub-section (3) of section 120 of the Act, a
Secretarial Audit Report given by a company secretary in practice in such form as may
be prescribed.
(2) It shall be the duty of the company to give all assistance and facilities to the company
secretary in practice for auditing the secretarial and other records of the company.
(3) The Board of Directors, in their Report made in terms of sub-section (3) of section 120
of the Act, shall explain in full any qualification or observation or other remarks made
by company secretary in practice in his report under sub-section(1).
(4) Where any default is made in complying with the provisions of this section,—
(a) the company and every officer who is in default shall be punishable with fine which
shall not be less than one lakh rupees but which may extend to five lakh rupees;
(b) the company secretary in practice who is in default shall be punishable with fine
which shall not be less than one lakh rupees but which may extend to five lakh
rupees”.
Applicability of Secretarial Audit
Section 204 of the Companies Act, 2013 provides for mandatory secretarial audit for every
listed company and companies belonging to other prescribed class of companies.
Such company is required to annex a secretarial audit report with its Board’s report.
As per rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, the prescribed class of companies is as under:
(a) every public company having a paid-up share capital of fifty crore rupees or more; or
(b) every public company having a turnover of two hundred fifty crore rupees or more.
The term ‘Turnover’ has been defined in section 2(91) as the aggregate value of the realization
of amount made from the sale, supply or distribution of goods or on account of services rendered,
or both, by the company during a financial year.

Private Company which is a subsidiary of a Public Company
Section 2(71) of the Companies Act, 2013 defines a “Public Company as one
(a) Which is not a private company;
(b) Has a minimum paid-up share capital of five lakh rupees or such higher paid-up capital as may
be prescribed.
The proviso to the definition states that “Provided that a company which is a subsidiary of a
company, not being a private company, shall be deemed to be public company for the purposes of
this Act even where such subsidiary company continues to be a private company in its articles.”
In view of this, it is clear that Secretarial Audit is applicable to a private company which is a
subsidiary of a public company, and which falls under the prescribed class of companies.
The companies which are not covered under section 204 may obtain Secretarial Audit Report
voluntarily as it provides an independent assurance of the compliances of applicable laws of the
company.
The section further provides that Secretarial Audit Report is to be submitted in a format
prescribed under the rules. As per sub-rule (2) of rule 9, the format of the Secretarial Audit Report
shall be in Form No. MR.3 (Annexure A).
Purpose of Secretarial Audit
Secretarial Audit provides an effective mechanism to ensure that compliance of various
legislations and regulations including the Companies Act and other corporate and economic laws
applicable to the company has been diligently done. This would give necessary comfort to the
Management, Regulator, and the stakeholders.
Secretarial Audit helps to detect the instances of non-compliances and facilitates taking
corrective-measures.
Secretarial Audit facilitates monitoring compliances with the requirements of law through a
formal compliance management programme which can produce positive results to the stakeholders
of a company:
— Companies that go the extra mile with their compliance programs lay the foundation
for good governance.
— Companies with an effective compliance management programme have lesser chance
of receiving penalties, both monetary and by way of imprisonment.
— Companies that imbibe business and personal ethics and an effective compliance
management programme within their work culture often enjoy employee and
customer loyalty and public respect for their brand, which can translate into better
market capitalization and shareholder returns.
— Recognition for the company as a good corporate citizen.
Few benefits that accrue from the Secretarial Audit are as under:
(a) Promoters
Secretarial Audit assures the promoters of a company that those in-charge of its
management are conducting its affairs in accordance with the requirements of laws
and the owners stake is not being exposed to unintended risks.

(b) Non-executive/Independent directors
Secretarial Audit provides comfort to the Non-executive/Independent Directors that
appropriate mechanisms and processes are in place to ensure compliance with laws
applicable to the company, thus mitigating any risk from a regulatory or governance
perspective.
(c) Government authorities/regulators
It also facilitates reducing the burden of the regulators in ensuring compliances and
they can take timely actions against the offenders.
(d) Investors
Secretarial Audit helps the investors in taking informed investment decision, as it
evaluates the company in terms of compliance and governance norms being followed
by the company.
(e) Other Stakeholders
It is an effective due diligence exercise for the prospective investors or joint venture
partners. Further Financial Institutions, Banks, Creditors and Consumers can measure
the law abiding nature of company management.
Secretarial Audit and Company Secretary in Practice
Company secretary in practice has been exclusively recognised for conducting secretarial audit.
In terms of section 204(1), only a member of the Institute of Company Secretaries of India holding
certificate of practice (company secretary in practice) can conduct Secretarial Audit and furnish the
Secretarial Audit Report to the company.
In order to provide guidance to its members who are in practice to adopt a robust and efficient
process of Secretarial Audit, the Institute of Company Secretaries of India has issued this guidance
note.
Appointment of Secretarial Auditor
As per rule 8 of the Companies (Meetings of Board and its powers) Rules, 2014, secretarial
auditor is required to be appointed by means of resolution at a duly convened board meeting of the
company.
Time of appointment
It is advisable that the Secretarial Auditor is appointed at beginning of the year as secretarial
audit entails checking of compliances on a continuous basis. As a good practice, the Secretarial
Auditor should submit a report to the Board at the end of each quarter as to the compliances of the
company.
Notice of Annual General Meeting
Para 1.2.1 of draft Secretarial Standard on General Meetings requires that the notice in writing
of every Meeting shall be given to every Member of the company. Such Notice shall also be given to
the Directors and Auditors of the company, to the Secretarial Auditor, to Debenture Trustees, if any,
and, wherever applicable or so required, to other specified persons.
Rights and duties of Secretarial Auditor under the Companies Act, 2013
Section 143 of the Companies Act, 2013 deals with powers and duties of Auditors. Sub-
section (14) of the section provides that the provisions of this section shall mutatis mutandis apply
to the Company Secretary in Practice conducting Secretarial Audit under section 204.

Assistance and facilities to the company secretary in practice while conducting secretarial
audit
Section 204(2) of the Companies Act, 2013 provides that it is the duty of the company to give all
assistance and facilities to the company secretary in practice, for auditing the secretarial and
related records of the company.
Cost to the Company
Taking into account the assurance provided and the avoidance of penalties and the consequent
saving of the possible liabilities, the cost of Secretarial Audit is far less than the benefits which the
directors and the stakeholders would derive from Secretarial Audit.
Approach to Secretarial Audit
The object of the Secretarial Auditor’s Report is to undertake evaluation and form an opinion
and to report to the shareholders as to whether, and if so, to what extent, the company has
complied with the laws comprising various statutes, rules, regulations, guidelines about the board
processes and existence of compliance management system. This requires knowledge of the
corporate laws, economic laws, securities laws, FEMA, and other laws specifically applicable to the
company, Corporate governance provisions, Secretarial Standards etc. To be able to give an
effective report, a Company Secretary in Practice is expected to have the following:
(1) Knowledge : While conducting the Audit, the Secretarial Auditor should have the knowledge
of exact nature and activities of the company and the laws which are applicable to the
company. He should have understanding of existence of compliance system, Board
processes & procedures, secretarial standards etc.
(2) Team : He is required to ensure that he has a team of appropriately trained staff,
who can support the preparation of the report. Most importantly they should be
informed of the basic audit requirements and ethics. Related legislative and
administrative updates should be shared and communicated with the team to build
and maintain the expertise.
(3) Documentation & backup : He is expected to develop a manual & checklists which will help
in evaluation process. He is required to keep proper record of documents checked during
the course of audit.
(4) Third party supporting and evidences : It would always be helpful to check filing made by the
company at MCA & other authorities independently. Verification and enquiries can also be
made with the other statutory and internal auditors and consultants and Independent
Directors of the Company
(5) Adhering to the timelines : Schedule set to conduct the audit process should be strictly
adhered to in order to gain the confidence of the client and boost the expertise level of the
team.
(6) Honesty and impartiality : A Company Secretary in Practice has the professional duty to
provide an unbiased and objective view. Company Secretary in Practice should be
independent from the company being audited.
The Secretarial Auditor is expected to ensure that activities of the client company are in
accordance with the applicable procedure and that supporting evidence maintained by the
company is genuine.

(7) Maintaining Audit Diary : The Audit exercise needs to be planned and executed
professionally and verifications done by the team members should be recorded daily. Such
maintenance of diary would help in keeping audit trail that would come in handy to ensure
the quality of audit.
(8) Back up papers to be maintained : The Secretarial Auditor should maintain Audit Diary and
back up papers like working papers, supporting documents, observations, management
explanations, basis for his conclusions more particularly for qualifications in the report etc.
as these will provide the audit evidence for defending himself in any possible allegation of
misconduct so also peer review and help in defending himself in case of any enquiry or
questions from regulators.
General Principles/Guidelines while conducting Secretarial Audit
Audit is an intelligent and critical examination of the books and records of business done by an
independent qualified person. It is done. by process of verification of documents, registers, filings,
information, Systems, procedures and explanations received from the clients.
Audit scope determines the time involved in audit exercise, depth of auditing, aspects to be
covered etc. Audit scope depends on, relevant legal provisions, nature of audit, objectives of audit &
terms of engagement. However the terms of engagement cannot, restrict the scope of an audit in
relation to matters which are prescribed by legislation.
In the context of Secretarial Audit as contemplated by section 204 of the Companies Act 2013
and the Rules ,a very pertinent question which arises for consideration is the extent of detailed
verification/ evaluation that has to be resorted to before reporting or giving opinion on compliance
of the provisions of various laws as mentioned in form MR 3 and specific laws applicable to the
company concerned .
The audit should be organized to cover adequately all aspects of the enterprise as far as they
are relevant to the audit objectives. Appropriate verification has to be done with the help of
Checklists.
Therefore, certain techniques of sample checking and test checking should be applied before
forming a reasonable opinion that the document being certified projects a true and fair view of the
state of affairs. There are no specific modalities or stringent test practices applicable for conducting
Secretarial Audit. However, the following guiding principles can be adopted while deciding about
the extent of checking that is required.
It is a well established principle in any auditing practice that an auditor is not expected to carry
out a 100% checking of every piece of paper and information available in the company, in verifying
the final facts and figures represented in the end document. In financial audit, for instance, the
auditor is not expected to make a thorough scrutiny of each and every invoice raised / voucher
created by the company before accepting the sales figure given in the Balance Sheet.
The following are general techniques of auditing
A) sample checking
B) test checking
C) random checking
D) trial and error checking
The same techniques may be applied and adopted in secretarial audit. For instance...while
verifying the list of past and present shareholders , a company secretary in practice cannot be

expected to check every folio of the Register of Members, whose number could run into lakhs.
Similarly, the number of share transfers registered in a year could run into thousands. If one is
expected to check every transaction in these matters, it could be well almost impossible to meet the
statutory time limits for completing the audit assignment.
Therefore, certain techniques of sample checking and test checking should be applied before
forming a reasonable opinion that the document being certified projects a true and fair view of the
state of affairs. There are no specific modalities or stringent test practices applicable for conducting
Secretarial Audit.
Guiding principles can be adopted while deciding about the extent of checking that is required
based on size of company, nature of industry, number of transactions and other relevant factors.
The following guiding principles be adopted while deciding about the extent of checking that is
required.
(i) The need for every detailed checking is greatly reduced if there are adequate measures of
internal control and checks and balances built into the systems and procedures of the
organization. For instance, the procedure for registration of share transfers could be so
designed that the mistakes and errors committed at one stage are automatically detected
and corrected by another, before the whole process is complete. The system could also
provide for automatic cross verification - particularly in cases where the process is
computerized.
(ii) The principle of materiality is another important concept. The sample chosen for detailed
checking should be representative of the whole, or the ‘population’, in statistical parlance.
For example, in the case of share transfers, instances of transfer of large blocks of shares
could be chosen for detailed scrutiny. Or, the ‘busy’ period for transfer of shares in the year
could be identified and selected for sample checking.
(iii) ‘High risk’ areas could be identified and subjected to more extensive scrutiny than others.
For instance, in the case of shares on which there are restrictions on transfer-statutory or
otherwise, a more extensive examination is warranted.
In conclusion, it may be pointed out that a company secretary in practice will do well to
remember that the ultimate responsibility of the facts and figures certified will rest with him. While
the extent of checking is a matter of personal judgment, he should safeguard himself against any
possible charge of negligence in respect of inaccurate or incomplete statements, certified by him. A
Company Secretary in Practice is advised to exercise all possible care, reasonable skill & due
diligence.
If question arises whether the approach to audit should be full or part or sample basis, then
Company Secretary in Practice is advised to always prefer for complete checking if transactions are
less and if size of the organization is medium or small. However for bigger organization quality time
need to be given throughout the financial year by frequent visits at regular intervals.
Adequate enquiries should be made in respect of matters which are capable of direct
verification. Mere getting certification from experts and or Management may defeat the purpose of
this audit.
He should obtain sufficient appropriate evidences through the verification of compliances and
other substantive procedures to enable him to draw reasonable conclusions to form an opinion.

Minimum fees to be charged with respect to conduct of Secretarial Audit
There is no minimum fees prescribed by ICSI for conducting Secretarial Audit by Company
Secretary in practice. However, it would be in the fitness of things that Company Secretary in
practice takes proper call about fees considering the nature & size of the company, type of company
and the efforts required to be put in while carrying out Secretarial Audit. It is expected that member
should maintain high standard and quality in audit process.
Peer review of Secretarial Auditors
As of now, there is no requirement of peer review of Secretarial Auditors.
Process of Secretarial Audit
Secretarial Audit is a process to check compliance with the provisions of all laws applicable
specifically to the company and rules/regulations/procedures; adherence to good governance
practices with regard to the systems and processes of seeking and obtaining approvals of the Board
and/or shareholders, as may be necessary, for the business and other activities of the company,
carrying out activities in a lawful manner and the maintenance of minutes and records relating to
such approvals or decisions and implementation. The Secretarial Auditor also expresses an opinion
as to whether there exist adequate systems and processes in the company commensurate with the
size and operations of the company to monitor and ensure compliance with applicable laws, rules,
regulations and guidelines.
Communication to earlier Incumbent
Whenever a practicing company secretary is appointed as Secretarial Auditor in place of the
existing Secretarial Auditor, he/she should communicate the appointment to the earlier incumbent
in writing, in view of the provisions of clause (8) of Part I of the First Schedule to the Company
Secretaries Act, 1980 and the relevant pronounced judgments.
Acceptance of Appointment
A formal letter for appointment should be issued by the company to the secretarial auditor
along with the copy of the board resolution for appointment. The secretarial auditor shall confirm
acceptance of appointment in writing.
Preliminary Discussions/Surveys
It is important to have relevant information about the company. The secretarial auditor is
expected to take an overview of the operations of the company and interact with the personnel
involved to know about the nature of the business. He may opt for surveys for generating
information about the company.
Preliminary Meeting
The preliminary meeting with the senior management and the staff involved in the audit will
give a fair idea of what is expected and the manner in which audit activities are to be undertaken. At
this stage a time frame of the secretarial audit should be determined and finalized. The secretarial
auditor shall discuss the scope and objectives of the audit, gather information on important Board
processes, evaluate existing control systems and prepare the audit plan.
Draft Secretarial Standard- 1 i.e. Secretarial Standard on Meetings of Board of Directors also
provides the ‘list of laws applicable specifically to the company’ as one of the illustrative items of
business which shall not be passed by circulation and shall be placed before the Board at its
Meeting.

Finalization of Audit Plan and Briefing the Staff
It is important to work out an audit plan. The plan involves briefing the audit staff as to
allotment of work, fieldwork responsibilities and other roles. The audit plan should
comprehensively outline the fieldwork and usage of auditing tools. The review of controls helps the
auditor determine the areas of highest risk and design tests to be performed in the fieldwork
section. It is essential that the audit plan adhers to the timelines. Detailed checklist for each aspect
of secretarial audit should be prepared and audit staff should be properly sensitized before
commencement of audit.
Testing, Interviews and Analysis
The secretarial auditor may use a variety of tools and technology to gather information about
the company’s operations. The secretarial auditor should determine whether the controls identified
during the preliminary review are operating properly and in the manner described by the
Company. Fieldwork typically consists of interviewing the staff of the company whether formally or
informally, reviewing procedure manuals, processes, testing and analysing compliance with
applicable policies and procedures and laws, rules, regulations and assessing the adequacy of
controls. This exercise may result in significant findings which the secretarial auditor may bear in
mind while preparing the secretarial audit report.
The Act places the secretarial auditor on the same footing as the statutory auditor in terms of
powers, duties and responsibilities while conducting the audit. [Section 143(14)(b)]
Working Papers
Working papers are a vital tool of the audit process. They form the basis for expression of the
audit opinion. They connect the management's records and information to the auditor's opinion.
They are comprehensive and serve many functions. A sample worksheet is place at Annexure ‘B’.
Management Representation Letter
It is strongly advised that the Company Secretary in Practice obtains a management
representation letter from the auditee company. The letter may be signed by Company
Secretary/Managing Director/ Senior Management who would normally have authority to issue the
same. Suggested format of the management representation letter is placed as ‘Annexure C’. The
format may be changed, depending on the circumstances and facts governing each audit. The
Secretarial Auditor can use this letter of representation as part of his audit evidence.
A Company Secretary in Practice is advised to exercise all possible care, reasonable skill & due
diligence. Adequate enquiries should be made in respect of matters which are capable of direct
verification. Mere getting certification from management may defeat the purpose of the audit.
Audit Summary for Discussions
It is recommended that the findings during the course of audit are summarized and presented
for initial discussions with the management for their views/ clarifications/replies.
Submission of Secretarial Audit Report
After considering the clarifications/replies of the management, the secretarial auditor shall
prepare the secretarial audit report in Form No.MR. 3. The report is addressed to the members but
is to be submitted to the Board. The report shall contain the opinion on the statutory compliances
examined by the auditor and shall state whether in his opinion the Company is carrying out / not
carrying out due compliances of the applicable provisions of the various laws. The report shall be
provided with or without qualifications. The specimen of ‘Qualified Secretarial Audit Report’ is
provided later in the Guidance Note.

Signing
The Secretarial Audit Report should be signed by the secretarial auditor who conducted or
under whose supervision the secretarial audit was conducted indicating his FCS/ ACS number along
with Certificate of Practice Number issued by the Institute of Company Secretaries of India.
Reporting with Qualification
A qualification, reservation or adverse remarks, if any, should be stated by the Secretarial
Auditor at the relevant places in his report in bold type or in italics. If the Secretarial Auditor is
unable to express an opinion on any matter, he should mention that he is unable to express an
opinion on that matter and the reasons therefor. If the scope of work required to be performed is
restricted on account of restrictions imposed by the company or on account of circumstantial
limitations (like certain books or papers being in the custody of another person who is not available
or a Government Authority), the Report should indicate such limitations. If such limitations are so
material that the Secretarial Auditor is unable to express any opinion, the Secretarial Auditor
should state that in the absence of necessary information and records, he is unable to report on
compliance(s) relating to such areas by the Company.
Further, the Board of Directors, in its Board’s report, shall explain in full any qualification or
observation or other remarks made by the Company Secretary in Practice in the Secretarial Audit
Report.
Duty to Report Fraud
A very significant duty has been cast on the company secretary in practice under section 143
(12) of the Companies Act, 2013. It provides that if the company secretary in practice, in the course
of the performance of his duties as auditor, has reason to believe that an offence involving fraud is
being or has been committed against the company by officers or employees of the company, he shall
immediately report the matter to the Central Government.
The Companies (Amendment) Bill, 2014 passed by Lok Sabha proposes to substitute section
143(12) as under:
“(12) Notwithstanding anything contained in this section, if an auditor of a company in the
course of the performance of his duties as auditor, has reason to believe that an offence of fraud
involving such amount or amounts as may be prescribed, is being or has been committed in the
company by its officers or employees, the auditor shall report the matter to the Central Government
within such time and in such manner as may be prescribed:
Provided that in case of a fraud involving lesser than the specified amount, the auditor shall
report the matter to the audit committee constituted under section 177 or to the Board in other
cases within such time and in such manner as may be prescribed:
Provided further that the companies, whose auditors have reported frauds under this sub-
section to the audit committee or the Board but not reported to the Central Government, shall
disclose the details about such frauds in the Board's report in such manner as may be prescribed.”
Further, as per the Companies (Audit and Auditors) Rules, 2014, in case the auditor has
sufficient reason to believe that an offence involving fraud, is being or has been committed against
the company by officers or employees of the company, he shall report the matter to the Central
Government immediately but not later than sixty days of his knowledge.
In case, company secretary in practice does not comply with the provisions of section 143(12),
he shall be punishable with fine which shall not be less than one lakh rupees but which may extend
to twenty-five lakh rupees.

Sub-section (13) of Section 143 provides that no duty shall be regarded as having been
contravened by reason of his reporting the matter (fraud) if it is done in good faith.
Fraud detection and reporting requires the Practicing Company Secretary to focus beyond
compliance. The Delhi High court observed in the matter of Globe Motors Limited v Mehta Teja
Singh & Company that although an agreement in which a director was interested could not said to
be invalid in view of compliance with the requirements of the Act, yet it is only a formal aspect of
compliance with the statutory provisions; the basic question is as to the conduct of the director and
whether it satisfies the test considering their fiduciary relationship to the company. Justice Sachar
further observed that the directors are expected to display utmost good faith towards the company
in their dealings with the company or on behalf of the company; they should not use the company’s
money or other property or information or other matters in their possession in order to gain any
advantage to themselves. Therefore a practicing company secretary should not be satisfied only
with compliance during secretarial audit. He needs to look beyond and satisfy himself that the
transactions which have taken place during audit period do not contain any fraud element.
Clause (f) of Explanation under section 447 of the Companies Act 2013 defines “ Fraud” in
relation to affairs of a company or anybody corporate includes any act, omission, concealment of
any fact or abuse of position committed by any person or any other person with the connivance in
any manner, with intent to deceive, to gain undue advantage from or to injure the interest of the
company or its shareholders or its creditors or any other person whether or not there is any
wrongful gain or wrongful loss.
A perusal of the definition brings out the following elements of “Fraud”:-

(a) Any act committed by any person or any other person with the connivance in any manner
with intent to deceive the company or shareholders or creditors or any other person whether
or not there is any wrongful gain or wrongful loss.
(b) Any omission committed by any person or any other person with the connivance in any
manner with intent to deceive the company or shareholders or creditors or any other person
whether or not there is any wrongful gain or wrongful loss.
(c) Any concealment of any fact committed by any person or any other person with the
connivance in any manner with intent to deceive the company or shareholders or creditors
or any other person whether or not there is any wrongful gain or wrongful loss.
(d) Any abuse of position committed by any person or any other person with the connivance in
any manner with intent to deceive the company or shareholders or creditors or any other
person whether or not there is any wrongful gain or wrongful loss.
(e) Any act committed by any person or any other person with the connivance in any manner
with intent to gain undue advantage from the company or shareholders or creditors or any
other person.
(f) Any act committed by any person or any other person with the connivance in any manner
with intent to injure the interest of the company or shareholders or creditors or any other
(g) Any omission committed by any person or any other person with the connivance in any
manner with intent to deceive the company or shareholders or creditors or any other person
whether or not there is any wrongful gain or wrongful loss.

(h) Any omission committed by any person or any other person with the connivance in any
manner with intent to gain undue advantage from the company or shareholders or creditors
or any other person.
(i) Any omission committed by any person or any other person with the connivance in any
manner with intent to injure the interest of the company or shareholders or creditors or any
other person whether or not there is any wrongful gain or wrongful loss.
(j) Any concealment of any fact committed by any person or any other person with the
connivance in any manner with intent to deceive the company or shareholders or creditors
or any other person whether or not there is any wrongful gain or wrongful loss.
(k) Any concealment of any fact committed by any person or any other person with the
connivance in any manner with intent to gain undue advantage from the company or
shareholders or creditors or any other person.
(l) Any concealment of any fact committed by any person or any other person with the
connivance in any manner with intent to injure the interest of the company or shareholders
or creditors or any other person whether or not there is any wrongful gain or wrongful loss.
(m)Any abuse of position committed by any person or any other person with the connivance in
any manner with intent to deceive the company or shareholders or creditors or any other
(n) Any abuse of position committed by any person or any other person with the connivance in
any manner with intent to gain undue advantage from the company or shareholders or
creditors or any other person.
(o) Any abuse of position committed by any person or any other person with the connivance in
any manner with intent to injure the interest of the company or shareholders or creditors or
any other person whether or not there is any wrongful gain or wrongful loss.
The Practicing Company Secretary has to examine the transactions during the period of audit
to identify whether any fraud element is present in the transaction. In the past “Fraud” has been
noticed in many cases of scams in the following kinds of transactions:-
 Related Party Transactions – In major scams like Satyam scam, Polypack scam
etcetera, the genesis of fraud was found in RPT. In the case of Satyam scam, RPT
transactions were put through for approval for approximately rupees 14000 crore
between satyam computer and maytas properties and maytas infrastructure. In the
case of Tyco scam, the CEO and MD carried out 88 separate RPT deals with business
entities owned by the sons and relatives of the CEO of Tyco. This scam lead to the
promulgation of the Code of Corporate Governance in UK.
 Excessive managerial remuneration – There were many corporate scams like

Worldcom, Tyco scam, Global Crossing, Fannie Mae etcetera where KMP drew
excessive remuneration from the company. In these scams either the profits were
overstated to draw excessive remuneration or remuneration was drawn through
wrong entries in books. Though the remuneration paid is within the limits prescribed
in schedule V, it is necessary to find out whether fraud element is present
 Insider Trading – In major scams like Enron, Health South, Galleon etcetera, criminal
insider trading was found. Share transfers are to be examined to find out whether
KMP or employees of the company either bought or sold shares of the company

before any critical event. In Enron, KMP sold off their shares just before filing of
Chapter 11 application by the company for bankruptcy. In the case of Health South
KMP sold off their shares before announcement of loss for the year
Inter Company transactions – Group company transactions are to be examined carefully to

identify fraud elements. Intercompany investments, guarantees, loans and provision of security
may be detrimental or injurious to the interest of the lending company, its shareholders and other
stakeholders. In the case of HIH scam, a leading health insurance company, the intercompany
transactions indirectly benefitted KMP of the parent company
 Mergers/demergers/acquisitions – In many scams relating to acquisitions fraud in

the form of asset stripping has taken place as in the case of Phone4U, Penta Media
etcetera.
 IPO frauds – The problem of vanishing companies has posed major problem to
Regulators. These companies diverted IPO funds for purposes other than those stated
in the prospectus. Frauds generally take place when funds raised from public by way
of IPO or deposits or otherwise or from Banks and Financial Institutions are not
utilized for the stated purposes. Therefore during secretarial audit the fund
utilization needs to be examined to identify fraud.
 Ponzy schemes – There were many scams in this category like Speak Asia, Saradha
chits etcetera. During secretarial audit it is necessary to identify whether any
principal amount is used to give returns to customers instead of paying returns out of
profits
The above mentioned areas are not exhaustive but only some given as examples to guide fraud
detection. As per rule 13 of the Companies (Audit and Auditors) Rules 2013, the Practicing
Company secretary has to bring to the notice of the audit committee the findings relating to fraud
and call for reply within 45 days. Within 15 days after obtaining reply the PCS has to submit his
report including the reply of audit committee to the Secretary, Ministry of Corporate Affairs, Govt.
of India in the format prescribed in ADT-4 If the audit committee does not give any reply, PCS has to
submit report as stated above within 60 days.
Scope of Secretarial Audit
In terms of Form No.MR-3, the Secretarial auditor needs to examine and report the compliance
of the following five specific laws:
(i) The Companies Act, 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to
the extent of Foreign Direct Investment, Overseas Direct Investment and External
Commercial Borrowings;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange
Board of India Act, 1992 (‘SEBI Act’):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992;
(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999;
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008;
(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer
Agents) Regulations, 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations,
2009; and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998;
In addition, the form MR-3, point (vi) also refers to ‘Other laws as may be applicable specifically
to the company.’
Consultation meets were held with the Corporates (through Company Secretaries in
employment) as well as Company Secretaries in practice, and taking into consideration the views
emerging therefore, the Council of the ICSI at its 226th meeting held on November 21, 2014 decided
on the Scope of Secretarial Audit includes:
 Reporting on compliance of Five laws as mentioned in form MR-3
o Companies Act, 2013,
o Securities Contracts (Regulation) Act, 1956 (‘SCRA’),
o Depositories Act, 1996,
o Foreign Exchange Management Act, 1999 to the extent of Foreign Direct Investment,
Overseas Direct Investment and External Commercial Borrowing,
o Regulations and Guidelines prescribed under the Securities and Exchange Board of
India Act, 1992 as specified in MR-3.
 Reporting on compliance of ‘Other laws as may be applicable specifically to the com pany’
shall mean all the laws which are applicable to specific industry for example for Banks- all
laws applicable to Banking Industry; for insurance company-all laws applicable to insurance
industry; likewise for a company in petroleum sector- all laws applicable to petroleum
industry; similarly for companies in pharmaceutical sector, cement industry etc.
 Examining and reporting whether the adequate systems and processes are in place to
monitor and ensure compliance with general laws like labour laws, competition law,
environmental laws.
The provisions relating to audit of accounts and financial statement of a company is dealt in the
Statutory Audit, and that relating to taxation is dealt in Tax Audit, the Secretarial Auditor may rely
on the reports given by statutory auditors or other designated professionals.
However, Secretarial Auditor is expected to report on the Secretarial Compliance of these laws.
A sample checklist is placed at Annexure-D

‘Other areas’ which need to be checked
Secretarial Auditor needs to examine and report on the compliance with the applicable clauses
of the following:
(i) Secretarial Standards issued by The Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with ….. Stock Exchange(s), if
applicable;
Format of Secretarial Audit report also requires reporting on whether-
- The Board of Directors of the Company is duly constituted with proper balance of
Executive Directors, Non-Executive Directors and Independent Directors.
- The changes in the composition of the Board of Directors that took place during the
period under review were carried out in compliance with the provisions of the Act.
- Adequate notice is given to all directors to schedule the Board Meetings, agenda and
detailed notes on agenda were sent at least seven days in advance, and a system exists
for seeking and obtaining further information and clarifications on the agenda items
before the meeting and for meaningful participation at the meeting.
- Majority decision is carried through while the dissenting members’ views are captured
and recorded as part of the minutes.
- There are adequate systems and processes in the company commensurate with the size
and operations of the company to monitor and ensure compliance with all applicable
laws including general rules like labour laws, competition law, Environmental laws,
regulations and guidelines.
Secretarial Auditor is required to report and provide details of specific events and actions that
occurred during the reporting period having major bearing on the affairs of the company in
pursuance of above referred laws/ rules & regulations.
Professional Responsibility and Penalty for incorrect Audit Report
Section 448 of Companies Act, 2013 deals with penalty for false statements. The section
provides that if in any return, report, certificate, financial statement, prospectus, statement or other
document required by, or for the purposes of any of the provisions of this Act or the rules made
thereunder, any person makes a statement,—
(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing it to be material,
he shall be liable under section 447.
Section 447 deals with punishment for fraud which provides that any person who is found to be
guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six
months but which may extend to ten years and shall also be liable to fine which shall not be less
than the amount involved in the fraud, but which may extend to three times the amount involved in
the fraud. In case, the fraud in question involves public interest, the term of imprisonment shall not
be less than three years.
In view of this, a company secretary in practice will be attracting the penal provisions of section
448, for any false statement in any material particular or omission of any material fact in the

Secretarial Audit Report. However, a person will be penalised under section 448 in case he makes a
statement, which is false in any material particular, knowing it to be false, or which omits any
material fact knowing it to be material.
It is pertinent to note that section 448 applies to “any person”. In view of this, a company
secretary in practice, who is an independent professional, will be attracting the penalty, as
prescribed in section 448 in case his observations in the secretarial audit report turns out to be
false or he omits any material fact, knowing it to be false or material.
Section 204(4) further provides that if company secretary in practice contravenes the
provisions of section 204, he shall be punishable with fine which shall not be less than one lakh
rupees but which may extend to five lakh rupees.
Besides, the Company Secretary in Practice shall be liable for professional or other misconduct
mentioned in First or Second Schedule or in both the Schedules to the Company Secretaries Act,
1980 and where held guilty, be liable for the following actions:
(i) where found guilty of professional or other misconduct mentioned in the First
Schedule:
(a) reprimand;
(b) removal of name from the Register of members upto a period of three months;
(c) fine which may extend to one lakh rupees.
(ii) where found guilty of professional or other misconduct mentioned in the Second
Schedule:
(a) reprimand;
(b) removal of name from the Register of members permanently or such period
as may be thought fit by the Disciplinary Committee;
(c) fine which may extend to five lakh rupees.
Functions of Company Secretary in Employment
Section 205 of the Companies Act, 2013 provides that the functions of company secretary (in
employment) shall include the following:
(a) to report to the Board about compliance with the provisions of this Act, the rules made
thereunder and other laws applicable to the company;
(b) to ensure that the company complies with the applicable secretarial standards;
(c) to discharge such other duties as may be prescribed.
Significantly, the section provides for compliance with the provisions of this Act, the rules made
thereunder and other laws applicable to the company as a part of the functions of a company
secretary.
In addition, the Central Government has prescribed the following additional duties for Company
Secretary (in employment) through rules:
(1) to provide to the directors of the company, collectively and individually, such guidance as
they may require, with regard to their duties, responsibilities and powers;
(2) to facilitate the convening of meetings and attend Board, committee and general meetings
and maintain the minutes of these meetings;

(3) to obtain approvals from the Board, general meeting, the government and such other
authorities as required under the provisions of the Act;
(4) to represent before various regulators, and other authorities under the Act in connection
with discharge of various duties under the Act;
(5) to assist the Board in the conduct of the affairs of the company;
(6) to assist and advise the Board in ensuring good corporate governance and in complying
with the corporate governance requirements and best practices; and
(7) to discharge such other duties as have been specified under the Act or rules; and
(8) such other duties as may be assigned by the Board from time to time.
Steps for preparing for Secretarial Audit
A company should prepare itself for secretarial audit by taking the following steps:
1. Compliance Programme: It is essential for every company to have a compliance
management system in place, that is updated from time to time. The compliance
management system covers generally aspects such as its objective, list of applicable laws,
compliance risk management framework, establishment of systems and processes for
effective compliance, appointment of chief compliance officers, compliance ownership and
so on.
Evaluating or Recommending a Compliance programme in the course of Secretarial Audit
The Secretarial Auditor should evaluate such aspects in the course of Secretarial Audit that
should help him in identifying the gaps, if any, in the compliance management system in
terms of policy, procedure, implementation, compliance risk management, compliance
structure, training & Communication, monitoring & control. Based on the evaluation of
Compliance management system, recommendations may be made to strengthen the same.
The company secretary in practice can also recommend for compliance management
system if the company does not have one.
A template of Compliance Management System placed at Annexure E.
2. Team : Compliance with various laws and legal parameters by the company is essential to
avoid unwanted litigations. A company may constitute a team of officers responsible for
compliances under different laws.
3. Maintenance of Records : The entity at all levels should imbibe the practice of maintaining
proper records. Concerned employees must be sensitized with the importance of record
management system and ensure availability of records for verification.
4. Preparation of Compliance Chart : A company may prepare compliance chart under various
laws applicable to the company as a checklist. Various charts are readily available but a
customized chart suited to the specific requirements of the company may be a better option.
5. Conduct Compliance Awareness Programmes: A company may organize compliance
awareness programmes at all the organizational levels to sensitize the employees about the
requirement and importance of compliance and penalties for non- compliance.
Further section 204 provides that it is the duty of the company to give all assistance and
facilities to the company secretary in practice, for conducting the secretarial audit. Hence, it
becomes the responsibility of the working directors/company secretary of the company to provide
the required information to the Company Secretary in Practice to enable him to conduct the
Secretarial Audit in a timely and efficient manner.

Annexure A
Form No. MR-3
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED … … …
[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014]
To,
The Members,
……….… Limited
I/We have conducted the secretarial audit of the compliance of applicable statutory provisions
and the adherence to good corporate practices by……. (name of the company).(hereinafter called
the company). Secretarial Audit was conducted in a manner that provided me/us a reasonable basis
for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.
Based on my/our verification of the .....………………………….. (name of the company’s) books,
papers, minute books, forms and returns filed and other records maintained by the company and
also the information provided by the Company, its officers, agents and authorized representatives
during the conduct of secretarial audit, I/We hereby report that in my/our opinion, the company
has, during the audit period covering the financial year ended on , complied with the
statutory provisions listed hereunder and also that the Company has proper Board-processes and
compliance-mechanism in place to the extent, in the manner and subject to the reporting made
hereinafter:
I/we have examined the books, papers, minute books, forms and returns filed and other records
maintained by ………….. (“the Company”) for the financial year ended on , according to
the provisions of:
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange
Board of India Act, 1992 (‘SEBI Act’):-
Regulations, 1992;

Regulations, 2008;
2009; and
(vi) .............................................................. (Mention the other laws as may be applicable specifically to
the company)
I/we have also examined compliance with the applicable clauses of the following:
(ii) The Listing Agreements entered into by the Company with ….. Stock Exchange(s), if
applicable;
During the period under review the Company has complied with the provisions of the Act,
Rules, Regulations, Guidelines, Standards, etc. mentioned above subject to the following
observations:
Note : Please report specific non compliances / observations / audit qualification, reservation or
adverse remarks in respect of the above para wise.
I/we further report that
The Board of Directors of the Company is duly constituted with proper balance of Executive
Directors, Non-Executive Directors and Independent Directors. The changes in the composition of
the Board of Directors that took place during the period under review were carried out in
compliance with the provisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed
notes on agenda were sent at least seven days in advance, and a system exists for seeking and
obtaining further information and clarifications on the agenda items before the meeting and for
meaningful participation at the meeting.
Majority decision is carried through while the dissenting members’ views are captured and
recorded as part of the minutes.
I/we further report that there are adequate systems and processes in the company
commensurate with the size and operations of the company to monitor and ensure compliance with
applicable laws, rules, regulations and guidelines.
Note: Please report specific observations / qualification, reservation or adverse remarks in respect
of the Board Structures/system and processes relating to the Audit period.
I/we further report that during the audit period the company has.................................
(Give details of specific events / actions having a major bearing on the company’s affairs in
pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to
above).

For example:
(i) Public/Right/Preferential issue of shares / debentures/sweat equity, etc.
(ii) Redemption / buy-back of securities.
(iii) Major decisions taken by the members in pursuance to section 180 of the Companies Act,
2013.
(iv) Merger / amalgamation / reconstruction, etc.
(v) Foreign technical collaborations.
Place : Signature:
Date : Name of Company Secretary in Practice / Firm:
ACS/FCS No.
C P No.:
Note : Parawise details of the Audit finding, if necessary, may be placed as annexure to the report.

Annexure B
Sample WorkSheet
1. CAPITAL STRUCTURE
Particulars As on Add: Increase Less: Reduction Date of passing Capital as on

01/04/2014 in Capital (if in Capital (if resolution 31/03/2015
any) any)
Authorised Capital
Equity
Preference
Unclassified
Issued Capital
Subscribed Capital
Paid-up Capital
Public Issue Not
Applicable
Rights Issue Not
Applicable
Bonus Issue Not
Applicable
Private Placement/ Not
Preferential Applicable
Allotment (Other
than conversion)
Private Placement/ Not
Preferential Applicable
Allotment (arising
out of conversion)
Allotment of shares Not
pursuant to ESOP Applicable
Allotment Not
consequent to Applicable
Scheme of
Arrangement/
Merger/
Amalgamation etc.
Buy-back of Shares Not
Applicable
Reduction of Not
capital Applicable
Share Forfeited
(if any)

2. DIRECTORS & KMP (EXISTING AND ANY CHANGE MADE BETWEEN 01/04/2014 TO
31/03/2015)
Name of DIN & Resi- Date of Desig- Nature Whether Number of Date of
Director PAN dential Appoint nation (Independent/ liable to Shares held in the Cessation (If
/ KMP Address ment/ Promoter/Prof retire by Company and % any)
last re- essional/Execu rotation of shareholding
appoint tive/Non-
ment Executive/
Nominee) In
case of
Nominee,
mention whose
nominee he/
she is

3. AUDITOR
Type of Auditor Name of Auditor/ Address of the Date of Tenure for the
(Internal/Statutory/ Firm & PAN Auditor/Firm Appointment appointmentD
Cost) ate of
Cessation, if
any
Statutory Auditor
Joint Auditor
Branch Auditor
Secretarial Auditor
Internal Auditor
Cost Auditor
4. MINUTES
a. Board Meeting
Date of Gap Date of Place of Total No. Leave of Total No. Chairman of the
Meetin between serving Meeting of Absence of Meeting
g the two the Directors granted
Directors
Board notice on the to
Present
Meetings and Board on Director
(Days) mode date of
meeting

Date of the Date of Circulation Last Date on Date of signing of Date on which
Meeting of Draft Minutes which comments the Minutes Minutes entered in
received from the Minutes Book
Directors
b. Annual/Extra Ordinary General Meeting
Date of Date of Place of Cut off Evoting Date of Date of Total No. No. of No. of Chair-
Meeting serving Meeting Date for Period submitting report of Mem- Proxy man of
the E-voting Report to RoC submitted Members bers attended the
notice under Section to SE on Book atten- the Meeting
121 of the Act Closure ded the meeting
meeting
c. Committee Meeting Audit/Nomination & Remuneration/etc.)
Type of Date of Date of Place of Total No. Leave of Total No. of Chairman of the
Meeting Meeting serving the Meeting of Absence members Meeting
notice members Granted Present
on date of
meeting

5. Details Regarding Office of Place of Profit
Name of Qualifi- Age (as on Design Date of Remuneration as Relation No. of Date of Reasons for
Employee and cation 01/04/14) ation Appointm per last salary with Shares leaving leaving
PAN No. ent drawn Director/M held employ-
ember if ment
any
6. KEY MANAGERIAL PERSONNEL
Name Qualification Age (as on Desig- Date of Remunerat Date of Date of Date of No. of Shares held
of 01/04/14) nation Appoint- ion as per taking filing of filing of
Person ment last salary approval MR-1 MGT-14
drawn (as from and SRN and DIR-
PAN per Committe 12 and
Schedule e/Board/ SRN
V) Members

7. Charges
Name of Charge Id Date of Amount of Security Whether any Date of Remarks

Charge Creation/ Charge Provided Personal Satisfactio
Holder Modification property of n if any
Director/
other person
involved
8. FINANCIAL STATEMENTS
a) Detailed list of Loans and Advances given by the

Company between 1st April, 2014 to 31st March,
2015 and their confirmation letters.
b) Whether there are any relatives of directors/

shareholders to whom Loans and Advances have
been given?
c) Complete list of unsecured loan taken by the

Company and their terms and conditions and
with proper bifurcation between from Directors,
Relative of Directors, Members and Body
Corporate.

d) Complete list of Sundry Creditors containing the
following details:
i. Nature of Balances
ii. Opening Balance and Transactions made
e) Statement of Related Party Transactions as per
AS-18 and the Approval of Board/Shareholder
for approving the transaction related to RPT.
f) Details of Dividend declared:
Particulars
Amount Paid
Percentage of dividend
paid
Dividend Tax Paid
Date of Payment of
Dividend
Actual amount claimed by
the shareholder
Amount transferred to
unpaid dividend account
Amount transferred to
IEPF and SRN of Form I
and 5INV
9. APPROVALS FROM RESERVE BANK OF INDIA
a) Whether company has made any foreign investment or

company has received FDI?
b) Whether company has filed annual statement related to Foreign

assets and liabilities? If yes, Please mention filling date
c) Whether company is having External Commercial

Borrowing/issued FCCB? If yes provide copy of LRN issued by
RBI and Form ECB 2.
d) Whether company has made any investment in

Abroad/provided guarantee to the Foreign Company? If yes,
provide details.
e) Whether any Show cause notice received by the company

issued by Director of Enforcement/ RBI under
FERA/FEMA/DIPB/other appropriate authority and reply
submitted by the company for the said notices.

10. PROSPECTUS
a) Copy of prospectus filled with the RoC from time to time.
11. DEPOSITS
a) Whether any deposits u/s 73 & 74 of CA 2013 have been
accepted by the company.
b) If yes, Whether the provisions of the Deposit rules u/s 73 & 74
of CA 2013 have been complied with.
12. OTHERS
a) All Statutory Registers
i. Register for application and allotment of shares
ii. Register for transfer of shares
iii. Register of Director, and Key Managerial Personnel
iv. Register of Members
v. Register of Charges
vi. Register of contracts in which directors and KMP are

interested
vii. Register of Disclosure of Interest by the Directors
viii. Register for declaration of interest in the shares held by

another person who is not a beneficial owner
ix. Register for payment of Dividend
x. Register for unpaid/unclaimed Dividend
xi. Register for Fixed Assets along with the locations of the
assets
xii. Register of Investments, Loans, Guarantee and

Securities provided by the company
xiii. Common Seal Register
xiv. Register of issue of duplicate share certificates
xv. Register of Debenture-holders
xvi. Register of buy-back of shares
xvii. Register of Employee Stock Options

Name of the Company
Forms and Returns filed by the Company pursuant to the provisions of the Companies Act,
2013 read with the Rules/ Regulations made thereunder
Financial Year 2014 – 15

In case of delay,
Whether whether
Section & filed within prescribed
Sr. Form Particulars Date of
Rule the procedure SRN Status
No. No. of Filing Filing
Applicable prescribed followed and
time additional fees
paid
1 2 3 4 5 6 7 8 9
10

Annexure C
Specimen Management Representation Letter
for Secretarial Audit
The following letter is a general guidance. Representation made by management may vary from
one entity to another and from one year to another. It should be adopted in the light of individual
requirements and circumstances.
[XYZ Limited]
M/s ABC & CO, Date:
Company Secretaries,
ZYZ Road,
----------
Dear Sir,
This representation letter is provided in connection with your audit of the Secretarial Records
maintained under The Companies Act, 2013 (the Act) and the rules made thereunder; (ii) The
Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; (iii) The
Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) Foreign Exchange
Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign
Direct Investment, Overseas Direct Investment and External Commercial Borrowings; (v) The
Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992
(‘SEBI Act’) and other applicable laws including labour laws like Factories Act, Payment of Gratuity
Act etc for the year ended on 31st March, 2015 Environmental Laws and Competition Laws for the
purpose required in it. We the undersigned acknowledge our responsibility for maintaining the
Secretarial records referred above and confirm, to the best of our knowledge and belief, the
following representations:
Company Law
1. The Company has maintained books of accounts as required under Section 128 of the
companies Act, 2013
2. The Company has complied with all the provisions of Companies Act, 2013 relating to
Statutory Audit/Cost Audit/Internal Audit.
3. No request for transfer or transmission of shares have been received by the company
during the year other than as recorded
4. Statutory Registers were kept open for public inspection during working hours on all
working days
5. Notice of Board meetings were duly sent to all the directors
6. No resolutions were passed by way of circulation during the year under review other than
7. Company has not obtained any secured loan from any financial institution/banks other than
those mentioned in the register of charges
8. Notice of annual general meeting has been duly sent to all the members
9. No show cause notice has been received by the company under the Acts referred above or
any other laws applicable on the company

10. Minutes of the Board and general meetings were entered in the minute books within thirty
days from the day of the meeting
11. The share certificates were properly stamped
12. The entries in the statutory registers were made within the prescribed time
13. The company has not done any alteration to the Articles of Association or Memorandum of
Association other than those of which the necessary compliance as to alteration is carried
out and the proofs of the filling with ROC are available in Records.
14. We have provided to you all relevant information and have given access to all data and
records
15. There is no pending litigation and claims other than reported in the balance sheet by way of
contingent liability.
16. No event other than reported to you specifically has occurred during the year which has a
major bearing on the company’s affairs in pursuance of the laws, rules, regulations,
guidelines, standards, etc. referred to above.
17. The views of all the dissenting Directors (if any) on important matters have been captured
and recorded in the minute.
18. The venue and time of Board meeting was finalized with the consultation of all board
members.
19.
20.
Securities Laws
1. All Price Sensitive Information was informed to the stock exchanges from time to time
2. All investors complains directly received by the company are recorded on the same date of
receipt.
3.
4.
Labour Laws
1. All the premises and establishments have been registered with the appropriate authorities.
2. The Company has not employed any child labour/Bonded labour in any of its
establishments.
3. The company is ensuring the compliance of PF/ESI and other social security measures to
the contract employees. One of the responsible officers of the company carries out the
survey regarding the compliance of this.
4.
5.
Environmental Laws
1. The Company is not discharging the contaminated water at the public drains/rivers. The
company has efficient water treatment plants at its factory premises (if applicable)
2. The company has been disposing the hazardous waste as per applicable rules
We are attaching herewith the list of various applicable laws to the company other than the laws
listed above.
For XYZ Limited]
Date Director Director
Place

Annexure-D
Sample Checklist
COMPLIANCE REPORT UNDER INCOME TAX ACT
MONTHLY MONTH : ………..… 2014
NATURE OF COMPLIANCE DUE DATE DATE OF REMARKS

COMPLAINCE
Payment of TDS : Salaries 07 days

from the
Director Remuneration / Sitting Fees
end of the
Contractors month
Professional Fees
Interest/Commission
QUARTERLY QUARTER : ………..… 2014
NATURE OF COMPLIANCE DUE DATE DATE OF COMPLAINCE REMARKS
Payment of Advance Tax
Up to 15% 15.06.2014
Up to 45% 15.09.2014
Up to 75% 15.12.2014
Up to 100% 15.03.2015
Filing of Returns of TCS u/s 206C 15 days

from the
Filing of Returns of TDS Salary u/s 192 end of the
Quarter
Filing of Returns of TDS on Director
Remuneration u/s 194J(1)(ba)
Filing of Returns of TDS Interest u/s

194A
Filing of Returns of TDS Contract u/s

194C
Filing of Returns of TDS Prof. Fees u/s

194J
Filing of Returns of TDS Comm. u/s 194I

ANNUALLY FINANCIAL YEAR ENDED : 2014-15
Tax Audit u/s 44-AB 30.09.2014

Filing of Returns of Income u/s 30.09.2014
139(1)
Filing of Return on Specified
Domestic Transactions
Filing of Transfer Pricing Report
STATUS OF PENDING CASES /NOTICES RECEIVED:
DATE OF NOTICE A.Y CONTENTS AMOUNT STATUS OF REMARKS

OF THE OF ACTION
REED
NOTICE TAKEN
DEMAND
SPECIAL REMARKS IF ANY:
COMPLIANCE REPORT UNDER SALES TAX ACT/ VAT ACT
MONTHLY MONTH: ………..… 2014
NATURE OF DUE DATE OF AMOUNT BALANCE IF REMARKS

COMPLIANCE DATE PAYMENT PAID ANY
Payment of Tax : 10 days

State (VAT) from the
end of the
C.S.T
month
Entry Tax/ LBT
Professional Tax
QUARTERLY QUARTER: ………..… 2014
Filing of Returns: 30 days from

the end of the
Returns of State (VAT)
quarter
Returns of C.S.T.
Returns of Entry Tax
Returns of Professional Tax

POSITION OF SALES TAX DUES AS ON …./…../2014
(Rs. In Lacs)
REMARKS
PERIOD State VAT C.S.T. ENTRY TAX TOTAL
STATUS OF PENDING CASES/NOTICES RECEIVED AS ON ……/……/2014

(Rs. In Lacs)
DATE OF A.Y. CONTENTS OF AMOUNT OF STATUS OF REMARKS

NOTICE THE NOTICE DEMAND ACTION
RECEIVED TAKEN
SPECIAL REMARKS IF ANY
COMPLIANCE REPORT UNDER CENTRAL EXCISE ACT

FILING OF RT-12 RETURNS (ER-1) & E.R.-6
DUE DATE: 10.07.2014
DATE OF COMPLIANCE: …. /…. / 2014
STATUS OF PENDING CASES/NOTICES RECEIVED
DATE OF NOTICE A.Y. CONTENTS OF AMOUNT OF STATUS OF REMARKS
RECEIVED THE NOTICE DEMAND ACTION TAKEN
COMPLIANCE REPORT UNDER THE FINANCE ACT, 1994 (SERVICE ACT)

FILING OF HALF YEARLY SERVICE TAX RETURNS FOR THE HALF YEAR ENDED ON ………….. 2014
DUE DATE : 25.10.2014
DATE OF COMPLIANCE : …. /…. / 2014
STATUS OF PENDING CASES/NOTICES RECEIVED
DATE OF NOTICE A.Y. CONTENTS AMOUNT OF STATUS OF REMARKS

RECEIVED OF THE DEMAND ACTION
NOTICE TAKEN

Annexure E
COMPLIANCE MANAGEMENT SYSTEM
Prologue:
Compliance is a permanent and integral part of business processes that is ongoing and needs
continuous tuning in line with the business environment and the applicable regulatory ambit.
Compliance Management System should provide processes for
• preventing non-compliances through mechanism such as Compliance risk Management
framework, Policies, Processes & Procedures, Training and Communication, Code of
Conduct & Ethics programme etc.;
• detecting non-compliances through mechanisms such as effective whistle blowing,
compliance controls, compliance audits etc.;
• responding to non-compliance through remedial action, implementation of control tools
for non-recurrence of such non-compliance etc.
Through an effective Compliance Management System, the business and its constituents learn
about the compliance responsibilities individually and for the organisation as a whole, making
them a part of business processes; review operations to ensure responsibilities are carried out and
requirements are met; and timely corrective action are taken.
The objective of this template is to help the secretarial auditor in evaluating the critical aspects
of compliance management. Check-lists have been provided under each head, along with the intent
of the questions. Secretarial Auditor may fine tune the same to company specific depending on the
nature of industry, size of organisation and other relevant aspects that impact the compliance
management system.
COMPLIANCE MANAGEMENT SYSTEM - TEMPLATE

The Objectives
The objective of Compliance Management System is to manage the compliance risk effectively,
to promote ethical culture in the organisation, resulting in the maintenance and enhancement of the
reputation of the Company. Compliance management through systematic processes helps in
achieving compliance of all applicable laws.
The objective of Compliance Management System is -
• To establish and maintain centralised mechanism to ensure compliance with all applicable
laws (both Indian and International).
• To establish and maintain effective co-ordination of functional units and the compliance
department under the overall supervision of the Board.
• To incorporate changes in the existing applicable laws or introduction of new laws, into the
compliance process in real time manner.
• Effective communication of the changes in the regulatory mandates to the applicable
functional and other units in real time manner.
• To provide training on compliance requirements at regular intervals.

• To introduce and implement ethics programmes for Board, Senior Management and other
staff members.
• To establish pro-active compliance risk management culture into the organisation.
• To establish effective monitoring and control systems.
• To adopt fair market practices.
• To establish mechanisms to prevent, detect, report and to respond to non-compliances.
• To introduce effective whistle blowing mechanism.
• To establish compliance dashboard.
• ..........................................
• ..........................................
The Scope
1. A. Compliance with applicable laws
• .....................
• .....................
• .....................
• .....................
(To be kept updated and amended from time to time)
B. Adherence to Company Specific internal policies and procedures
• Code of Conduct
• Code on prevention of Insider Trading
• Policy on related party transaction
• IT Policy
• ........................................
• ........................................
2. Adherence with Vision and Mission statement of the Company.
3. To devise code of conduct for Board, senior management and employees
4. Conducting training on compliance, ethics, code of conduct.
5. Establishment of Corporate Compliance Committee.
6. Appointment of Chief Compliance officer.
7. Quarterly compliance Report to be presented to the Board.
8. Identification and classification of various compliance risks.
9. Organisation of compliance Audit, feed back, remedies.
10. .......................................
11. .......................................

Compliance Risk
Compliance risk is the current and prospective risk to earnings or capital arising from violations
of, or non-conformance with, laws, rules, regulations, prescribed practices, internal policies, and
procedures, or ethical standards. This risk exposes the institution to fines, civil money penalties,
payment of damages, and the voiding of contracts. Compliance risk can lead to diminished
reputation, reduced expansion potential and an inability to enforce contracts.
The Chief Compliance Officer
The Corporate Compliance Officer (CCO) is the custodian of the Corporate Compliance Plan.
The CCO should report on compliance activities that include but are not limited to:
• To establish and review the centralised compliance management system in tune with
business environment, strategic decisions of the company and the regulatory amendments.
• To guide and educate the Board on various compliances, regulatory and policy based
compliances.
• To devise clear compliance structure
• Liaison between Board, Functional heads and compliance staff.
• To advise the Compliance department regularly and as and when required.
• To devise annual compliance plan.
• To define the role and responsibilities of functional units and disseminate the information.
• To organise training for the Board and the staff on ethics and compliance.
• To establish and strengthen the Compliance Dashboard.
• Inform the Board and the functional departments about changes in the applicable
regulatory landscape and its implications on the organisation.
• To establish processes for effective monitoring and control.
• To present quarterly compliance report before the Board.
• .......................................
• .......................................
• .......................................
Board Level Corporate Compliance Committee
The primary responsibility of the Corporate Compliance Committee is to oversee the company’s
Corporate Compliance Program with respect to:
(I) compliance with the laws, rules and regulations applicable to the company;
(II) Compliance with the Company’s Code of Conduct;
(III) Compliance with Company’s policies and procedures;
(IV) Compliance with established standards;
(V) Compliance with prevention and detection of fraud, misappropriation etc.;
(VI) Oversight of the risk management activities of the company and the protection of
stakeholders;

(VII) Making recommendation to revise the compliance management programme.
The Compliance Department
The company should have a dedicated compliance department which should be independent
and sufficiently resourced. It should not be entrusted with any business targets. They have to work
closely with functional units. The staff of compliance department should have fair knowledge of
applicable laws, internal policies etc and should be imparted training at regular intervals. The Chief
Compliance Officer shall oversee the activities of Compliance Department.
The Compliance Dashboard
• The Compliance Dashboard should alert the company in the risk prone areas or non
compliances.
• It should display the compliance obligations on the compliance calendar or dashboard
• Before the date of regulatory mandate, and e-mail should be sent to the compliance owner.
• The Compliance owner should send the response once compliance is done.
The compliance dashboard helps in simplifying the compliance obligation, effectively managing
the compliance risk, facilitating board oversight, effective co-ordination of functional units.
Compliance System- Checklists
Sl. Question Yes/No Intent

No.
Board Oversight
1 Does the Board The Board should be updated quarterly Compliance with
approve compliance of the laws at least every quarter, ensuring compliance by
applicable Report ? all functional heads and presented by Compliance
department/Chief compliance officer helps in effective
Board oversight.
2 Does the Board review Compliance Management programme has to be revisited

Compliance at regular intervals in tune with the business
Management environment, regulatory changes etc.
programme at regular
intervals ?
3 Do the members make The Board Members are expected to visit Compliance
use of Compliance Dash Dashboard every day in over-seeing the compliance level
Board effectively and in the organisation.
act upon it when
required ?
4 Is the Board updated The Board should be updated with the applicable laws at
with the applicable regular intervals that helps the Board in reviewing
laws? compliance plan, overseeing compliances, reading
compliance dash board etc.

Chief Compliance Officer
1 Has the Company Overall Ownership should lie with an exclusive

appointed Chief individual who has strong hold on laws, rules and
Compliance Officer ? regulations. Appointment of Chief Compliance Officer
helps in effective co-ordination of compliances by
business units.
2 Has the role of Chief As part of Compliance programme, the specific duties of
Compliance officer Chief Compliance Officer be defined. This helps in casting
been specifically the responsibility as well.
defined?
3 Is the Chief Compliance Chief Compliance Officer shall be an independent person
Officer an independent who should not have any pecuniary interest with the
person? company and should not be associated with any specific
business unit.
4 Is the Chief Compliance Chief Compliance Officer reporting directly to Board
Officer reporting to helps in direct and effective communication of
Board? compliance aspects with the top management.
5 Does the Compliance The Chief Compliance officer should participate in
Officer participate in important strategic and contractual decisions. This helps
major decisions? him in assessing the legal implications of the same on the
company.
Systems and Processes
1 Has the company put in When there are business/functional units at different
place, a centralised locations, centralised mechanism of tracking and
mechanism for monitoring compliance helps in effective co-ordination
tracking and of different business units.
monitoring
compliance?
2 Has the company put in The company should have defined process in place for
place the process for updating the table of applicable laws. For example at
development and every quarter or introduction of new law or amendment
approval of table of to existing law, as the case may be
applicable laws,
function wise and
criticality wise?
3 Does the company have The process should provide for change in the regulatory
in-built mechanism in ambit applicable to the company.
place for alerts
whenever there is any
identification of
various laws and its
applicability to the

organisation,
specifically based on
the functions ? If so, is
the implementation
process for the same
effectively reviewed
and monitored ?
4 Has the company paid The compliance mechanism should provide for no-
any penalty for any tolerance to non-compliances. Non-compliances are to
compliance failure? If be addressed through establishing necessary controls
so, has the company for the same.
made gap analysis and
taken remedial
measures?
5 Has the company Compliance Owners at unit level helps in ensuring

appointed designated compliance in the respective business units.
compliance officials
(Compliance owners)
at unit level ?
6 Has the company co- Co-ordination of unit level compliances are essential for
ordinated the activities ensuring overall compliance.
of designated
compliance official
functional heads, Chief
Compliance officer and
the Board of Directors?
7 Is the Compliance The existing Compliance management should be subject

Management System to periodic audit that helps in bringing effective control.
subject to periodic
Audit?
Corporate Compliance Committee
1 Has the company Constituting the Board level Corporate Compliance

constituted corporate Committee helps in the effective involvement of the
compliance committee? Board in compliance management.
2 Are Functional Heads Participation of Functional Heads and the Chief

and Chief Compliance Compliance Officer in the meeting of Corporate enhances
Officer participating in the quality of discussions and decisions.
the meetings of
Corporate Compliance
Compliance Committee
Committee ?

3 Does the committee The Committee should meet atleast once in a quarter.
meet atleast in every This may be in line with assessment
quarter ?
Compliance Risk Management
1 Is compliance risk a Compliance risk should be classified as one of the major

part of ERM ? risks under ERM.
2 Has the company Some non- compliances result compoundable too. The
classified the company should identify the compliances based on
compliance risk based criticality. Compliance risks are to be assessed by Chief
on criticality Compliance Officer in consultation with functional heads.
(Legislation-wise) ?
3 Are the Compliance The Compliance Owners should be aware of implications

Owners aware of of non- compliances.
financial implications
of critical non-
compliances ?
4 Does the Company Compliance risk analysis helps establishing effective

undertake Compliance compliance controls.
Risk Analysis ?
Training and Communication
1 Has the company Regular training helps in understanding the intent,

imparted training to process and consequences of compliances in better
senior management & manner.
employees on
compliance
programme covering
regulatory aspects and
the internal policies ?
2 How does the company Reiterating on ethical issues is essential in any

communicate with the organisation, that would bring overall ethical culture in
employees on ethical the organisation.
issues ?
***

2
THE COMPANIES ACT, 2013
Introduction
Companies are required to operate within the applicable legislative environment. Protection of
interest of the stakeholders viz. shareholders, lenders, employees, customers, vendors, service
providers, regulators, etc. is paramount.
A company will be failing in its duty and commitment to be a responsible and good corporate
citizen, if it does not comply with the provisions of law. This proposition is based on the premise
that every provision of law in the statute book is made in the public interest.
GENERAL COMPLIANCE REQUIREMENTS
As per section 204 of the Companies Act, 2013 (the Act) read with Rule 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 , every listed company and
a company belonging to other class of companies as may be prescribed i.e. (a) every public
company having a paid-up share capital of fifty crore rupees or more; or (b) every public company
having a turnover of two hundred fifty crore rupees or more, are required to annex to its Board’s
report a Secretarial Audit Report, given by a company secretary in practice. Members are advised to
refer to any changes in rules, which may occur from time to time.
The secretarial auditor should inter- alia verify about the Maintenance of statutory registers
and records and compliances in respect of:-
I. Memorandum and/or Articles of Association.
II. Disclosures
III. Issue of shares and other securities
IV. Transfer and transmission of shares and other securities and related matters
V. Deposits
VI. Charges
VII. Meetings of directors/committees thereof, security holders and other stakeholders.
VIII. Secretarial Standards
IX. Dividend
X. Corporate Social Responsibility (CSR)
XI. Directors and Key Managerial Personnel(KMP)
XII. Loans to Directors, etc, and related party transactions
XIII. Loans, Investments, Guarantees and Securities
XIV. Registers, Filing of forms, returns and documents

Documents to be obtained/ verified for conducting Secretarial Audit
1. Memorandum and Articles of Association.
2. Forms filed with the Registrar of Companies with receipts.
3. Share Transfer Register.
4. Forms relating to Disclosures from Directors.
5. All statutory registers.
6. Minutes of the Board, AGM, Share Transfer, Remuneration, Audit Committees and other
Committees.
7. Copy of financial statement along with the Notice of AGM.
8. Notices of disclosure of directors’ interests.
10. Copies of contracts made between the company and any of the related parties.
11. Shareholder List, details of Share Transfers which have taken place during the financial
year.
12. Certificate from RTA stating the number of shareholders as on the close of the financial
year.
13. Indebtedness Certificate signed by Company Secretary/ CFO of the Company.
14. Listing and Trading Approval(s) from Stock Exchanges.
15. Intimation to Stock Exchanges, Confirmation from National Securities Depository Limited
(NSDL) and Central Depository Services (India) Limited (CDSL) for change of the name of
the company, change in the face value of equity shares, etc.
16. Change of name of the company, change in the face value of the company, new ISIN No of
the Company in respect of the allotment or as a result of any change in capital structure due
to any corporate action taken by the Company during the financial year under audit.
17. Board Resolution for any type of corporate actions taken by the Company.
18. Corporate Action Forms filed by the Company with Depositories.
19. Equity Shareholding pattern and its break up as at the close of the financial year.
20. Any orders received by the company from the High court/Tribunal or from any other
regulatory body.

A Company Secretary in Practice in order to verify the compliances has to verify the secretarial
records of the company with the help of the following checklist:-
Checklist
I. MEMORANDUM AND/OR ARTICLES OF ASSOCIATION
Sl. No. Particulars Remarks
Alteration of memorandum
1. The company has passed the special resolution and filed MGT.14
as per Companies (Management and Administration) Rules,
2014.
2. The company has altered its name with the approval of Central
Government.
3. The company has obtained fresh certificate of incorporation
from the Registrar in Form No.INC.25 as per Companies
(Incorporation) Rules, 2014.
4. If the company has shifted the registered office from one state to
another state, it is with the approval from the Central
government. Check whether the order of the Central
Government is filed with both the states in Form No INC 28.
5. In case company has raised money from public through
prospectus and still has any unutilised amount out of the money
so raised, a special resolution has been passed by the company
to change its objects for which it raised the money through
prospectus—
 the notice contains the details as provided in Rule 32 of
the Companies (incorporation) Rules, 2014
• the details, were published in the newspapers (one in
English and one in vernacular language) which is in
circulation at the place where the registered office of the
company is situated and was placed on the website of the
company, indicating therein the justification for such
change;
• the dissenting shareholders were given an opportunity to
exit by the promoters and shareholders having control in
accordance with regulations specified by the Securities
and Exchange Board.
Alteration of Articles
6. The company has passed special resolution with respect to

alteration of articles and has filed form MGT 14.
7. In case of conversion of a private company into a public

company or vice versa, the application was filed in Form No.
INC. 27

8. A copy of the order of the competent authority approving the
alteration has been filed with the Registrar in Form No. INC.27
together with the printed copy of the altered articles within
fifteen days of the receipt of the order from the competent
authority.
9. Provision for entrenchment has been made by an amendment in

the Articles, with the consent of all the members in case of a
private company/by passing special resolution in case of a public
company.
10. Every alteration made in the memorandum or articles has been

noted in every copy of the memorandum or articles.
11. The company sends on payment of fee, a copy of each of the

following documents to a member within seven days of the
request being made by him-
(i) the memorandum;
(ii) the articles;
(iii) every agreement and every resolution referred to in
section 117(1) if they have not been embodied in the
memorandum and articles.
Checked by: Reviewed by:

Date: Date:
Indicative list of documents to be checked (Alteration of memorandum):
1. Notice convening general meeting with relevant explanatory statement

2. Minutes of General Meeting
3. Annual Return
4. Financial Statement
5. Return of deposits
6. Advertisement for change in objects
7. Memorandum of Association
8. Articles of Association
9. INC23, INC24, INC25, INC26, INC28 (along with attachments)
Indicative list of documents to be checked (Alteration of Articles):
1. Minutes of General Meeting

2. Memorandum of Association
3. Articles of Association
4. INC27, MGT14

Checklist
II. DISCLOSURES
1. The address of registered office of Company is displayed at its

registered office and all other offices as per section 12;
Where the company has changed its name(s) during the last two
years, it has affixed along with its name, the former name(s) so
changed during the last two years.
2. Where the authorised share capital has been displayed in its

official publications, the subscribed/paid-up share capital is also
displayed as per section 60;
3. Company has disclosed its CIN, website address etc. as provided

in section 12
4. Website of company discloses the mandatory information.
5. Director Identification Number of each director is mentioned

while furnishing any return, information or particulars as are
required to be furnished under the Act.

Date: Date:
Indicative list of documents to be checked :
 Certificate of Incorporation
 Director Identification Number
 Website of the company
Website disclosures under the Companies Act, 2013
Section/Rules Requirement as per Companies Act
Sec 13(8)(i) read with Rule A company, which has raised money from public through
32(3) of the Companies prospectus and still has any unutilised amount out of the money so
(Incorporation) Rules, 2014. raised, shall not change its objects for which it raised the money
through prospectus unless a special resolution is passed by the
company, the details in respect of such resolution, shall also be
placed on the website of the company, if any.

Sec 73 read with Rule 4(3)of A company intending to invite deposits shall upload a copy of
the Companies (Acceptance circular issued to members inviting deposits on its website, if any.
of Deposits ) Rules, 2014
Sec 91 read with Rule 10 (1) Seven days previous notice of closure of the register of members,
of the Companies debenture holders or other security holders to be uploaded on the
(Management and website of the company, if any, or any other website as notified by
Administration) Rules, 2014 the Central Government.
Sec 101 read with Rule 18 In case notice of general meeting is sent through electronic means,
(3)(ix) of the Companies such notice shall be uploaded on the website of the company, if any,
(Management and or any website as notified by the Central Government.
Administration) Rules, 2014
Sec 108 read with Rule 20(3) In case the voting at general meeting is held through electronic
(xiv) of the Companies mode, the results declared along with the scrutinizer’s report shall
(Management and be placed on the website of the company, if any, immediately after
Administration) Rules, 2014 the result is declared by the Chairman.
Sec 110 read with Rule 22 Where any resolution is being passed by postal ballot, notice of
(4) of the Companies postal ballot to be uploaded on the website of the company, if any,
(Management and and it shall remain on the website till the last date for receipt of the
Administration) Rules, 2014 postal ballot from members.
Sec 110 read with Rule 22 Where any resolution is being passed by postal ballot, the result
(13) of the Companies declared along with the scrutinizer’s report shall be uploaded on
(Management and the website of the company, if any.
Administration) Rules, 2014
Sec 115 read with (Rule 23 Where for a resolution special notice has been given by a member
(3) of the Companies of the company and it is not possible for the company to send the
(Management and notice in the same manner as notice of general meeting, then apart
Administration) Rules, 2014 from publishing it in the newspaper, notice shall be placed on the
website of the company, if any, within seven days before the
meeting.
Sec 124(2) The company, making any transfer of an amount to the Unpaid
Dividend Account, prepare a statement containing the names, their
last known addresses and the unpaid dividend to be paid to each
person and place it on the website of the company, if any, and also
on any other website approved by the Central Government for this
purpose within 90 days of making any transfer.

Sec 135(4)(a) read with rule The Company shall disclose contents of CSR Policy in Board’s
9 of Companies (Corporate report and also place it on its website, if any.
Social Responsibility Policy)
Rules. 2014
Sec 136(1) A listed company shall also place its financial statements and all
other documents required to be attached thereto, on its website, if
any.
Sec 136(1)(a) Every company having a subsidiary or subsidiaries shall, place

separate audited accounts in respect of each of its subsidiary on its
website, if any.
Sec 177(10) Details of establishment of vigil mechanism shall be disclosed by

the company on its website, if any.
Sec 230(3) Where a meeting is proposed to be called in pursuance of an order

of the Tribunal under sub-section (1) of sec 230, a notice of such
meeting and every detail shall also be placed on the website of the
company, if any.
Sec 160 read with Rule 13 of Place the notice of or intention for the candidature of a person for
the Companies (Appointment the office of a director on the website of the company, if any, Seven
and Qualification of Director) days before the general meeting
Rules, 2014
Sec 168 read with Rule 15 of Information about resignation of the Director shall be posted on the
the Companies (Appointment website of the company, if any, within 30 days from the date of
and Qualification of Director) receipt of notice.
Rules, 2014)
Rule 7(3) of the Companies The notice of special resolution with regard to variation in terms of
(Prospectus and Allotment of contract or objects in prospectus shall be placed on the web-site of
Securities) Rules, 2014 the company, if any.
Rule 20(3)(b) the Companies The existing company shall, for the purpose of license under
(Incorporation) Rules, 2014. section 8, to publish a notice in the newspaper, and shall also be
uploaded on the websites as may be notified by the Central
Government, within a week from the date of making the application
to the Registrar
Rule 22 (1) (b) the Companies registered under section 8 for the purpose of seeking
Companies (Incorporation) conversion into any other kind shall upload a notice on the website
Rules, 2014. of the company, if any, within a week from the date of making the
application to the Regional Director.

 Website of the company

 Copy of documents which are uploaded on website
Checklist
III. ISSUE OF SHARES AND OTHER SECURITIES
Private Placement U/S 42 (Read with Companies (Prospectus and Allotment of Securities)
Rules, 2014
Public and Private Company:
May allot securities as:
1. Rights issue
2. Bonus issue
3. Private placement
Private Placement u/s 42
1. To ensure that persons to whom offer has been made does not
exceed 200 in a financial yearfor each kind of security.
It is to be noted that any offer or invitation made to qualified
institutional buyers or to employees of the company under
scheme of employees stock option shall not be considered while
calculating the limit of two hundred persons.
2. No allotment against any previous offer / invitation of any kind

of security is pending.
3. Company has passed special resolution for each offer / invitation

(except in case of NCDs, where one resolution in a year for all
offers during the year is sufficient).
4. Explanatory statement contains justification for price and

premium, if any and requirements of section 102, if any.
5. Issue of a private placement offer letter was in form PAS-4.
6. Requirements of Private placement offer letter:

a. Was accompanied by serially numbered application form
b. Addressed specifically to the person to whom offer is
being made
c. Sent to only such person in writing / electronically

d. Sent within 30 days of recording names in the list
e. No person other than the addressee was allowed to apply
through application form
f. Value of offer / invitation per person was not less than
Rs. 20,000 of face value of the security.
7. Private placement was offered to such persons whose names are

recorded prior to the invitation to subscribe.
8. The Company has maintained record of offer letters in form no.

PAS-5.
9. Company has filed offer letter with ROC in form no. PAS-3 along
with record of offer letters within 30 days of circulation of offer
letter.
10. Amount against offer to be received only by cheque / demand

draft / other banking channels but not by cash – only from the
bank account of the subscriber.
11. Company to maintain record of the bank account from which

payments received. Ensure that payment has been made from
the bank account of the person subscribing to such securities.
12. In case of joint holders, payment was received from first

applicant only
13. Allotment was completed within 60 days from date of receipt of

application form. If not ,application money repaid within 15
days of completion of 60 days. If not repaid, the application
money along with interest at 12 percent per annum from expiry
of 60th day was paid.
14. Board resolution to specifically contain authority for issuance of

share certificates to two directors and CS / one authorized
person. One of the two directors should be director other than
MD / WTD.
15. Share application money to be kept in separate bank account

and was utilized only for (a) adjustment against allotment or (b)
repayment.
16. Company filed Return of allotment in form PAS-3 within 30

days.
17. Share certificates were issued within 2 months of allotment of

shares / 6 months of allotment of debentures.

18. In case of contravention, money was refunded within 30 days of
order imposing the penalty.
19. Company has made entry in Register of Members.
 Minutes of Board Meeting
 Notice convening general meeting with relevant explanatory statement
 Register of members
 Board resolution authorising person to sign certificate
 PAS-3, PAS-4, PAS-5, MGT-14
PREFERENTIAL ALLOTMENT U/S 62

Applicable to Private and Public Company
Kinds of securities covered:
i. equity shares,
ii. fully convertible debentures,
iii. partly convertible debentures,
iv. any other security which would be convertible into equity shares at a later date
Whenever a company wants to increase its subscribed capital: It shall allot further shares to:
I. Existing equity shareholders in proportion to the paid up share

capital held by them.
Procedure to be followed:
a. Letter of offer to be sent to existing equity shareholders
as notice by registered post/ speed post / electronic
mode at least 3 days before opening of the issue
b. Contents of letter of offer : (1) Specify number of shares
offered (2) time limit of minimum 15 and maximum 30
days from date of offer within which the offer if not
accepted, would be deemed to have been declined (3)
offer to include a right exercisable by person concerned
to renounce the shares offered to him in favour of any
other person
c. On expiry of period / renunciation, Board may dispose of
the shares in a manner not disadvantageous to the
company and the shareholders
d. Ensure that the allotment was made within 60 days from
the date of receipt of the share application money to
comply with Companies ( Acceptance of Deposits) Rules,
2014
In case of any preferential offer made by a company to one or
more existing members only, the provisions of sub-rule (1) and
proviso to sub-rule (3) of rule 14 of Companies (Prospectus and
Allotment of Securities) Rules, 2014 shall not apply.

Rule 14 of Companies (Prospectus and Allotment of Securities)
Rules, 2014 deals with private placement.
II. Employees under ESOP Scheme; subject to prior special

resolution and the conditions specified in Rule 12 of the
Companies (Share Capital and Debenture) Rules, 2014
III. Any persons: (1) subject to prior special resolution; (2) either for
cash or for consideration other than cash, (3) if price is
determined by valuation report of registered valuer.
This section does not apply where increase in subscribed capital is caused by exercise of option
to convert debentures / loan into shares of the company provided terms of issue of debentures /
loan have been approved by special resolution before issue of debentures / raising of loan.
 Copy of notice of offer of shares
 Articles of Association
 Intimation to accept /decline the shares offered
 Special Resolution to offer of shares to employees under ESOP and minutes thereof
 Scheme of employee stock option
 Special Resolution for offering the shares to any other persons and minutes thereof.
 PAS-3, MGT-14
Checklist for compliances about Employee Stock Option under Companies Act, 2013 and
Rules made thereunder
(I) unlisted public companies
The Companies Act, 2013 lays down the provisions for issue of employee stock option under
section 62 (1)(b) and rule 12 of the Companies (Share Capital and Debentures) Rules, 2014. A PCS
is required to verify the following:
1. Whether the company has passed the special resolution as

required under section 62 (1) (b) of the Companies Act, 2013.
2. If passed, check the copy of the special resolution for approving
the scheme of ESOP.
3. Check whether special resolution has been filed with ROC in
Form No. MGT.14 as per Companies (Management and
Administration) Rules, 2014.
4. Check that the explanatory statement to the notice of the meeting
contains the disclosures required to be made under the sub-rule
(2) of rule 12 of Companies (Share Capital and Debentures) Rules,
2014.

5. Check that the Director’s Report contains the disclosures
required to be made in such report under sub-rule (9) of the rule
12 of Companies (Share Capital and Debentures) Rules, 2014.
6. Verify the Register of Employee Stock Options maintained in

Form No. SH.6 of Companies (Share Capital and Debentures)
Rules, 2014 and that the register is duly authenticated by the
company secretary of the company or by any other person
authorized by the Board for the purpose.

Date: Date:
 Special Resolution approving ESOP alongwith explanatory statement
 Minutes of General meeting
 Board’s Report
 Register of Employee Stock Option (Form SH-6)
 PAS-3, MGT-14
Procedure for issue of shares to any persons other than existing equity shareholders u/s 62
(1) (c) (taking into account procedure u/s 42 also) :
1. Prepare a list of persons (not exceeding 200 in a financial year for

each kind of security) to whom offer may be made.
2. Ensure that no allotment against any previous offer/ invitation of
any kind of security is pending.
3. Issue to be authroised by AOA.
4. Pass special resolution for such issue.
5. Explanatory statement to contain justification for price and
premium, if any and also other matters as prescribed by the rules.
6. Determine issue price by valuation report of registered valuer /
independent merchant banker/ independent CA having
experience of ten years.
7. The issue price not to be less than the price determined on the
basis of valuation report.
8. Only fully paid securities can be issued.
9. Issue an offer letter in Form No.PAS-4.
10. Requirements of Offer letter:
a. To be accompanied by serially numbered application form
b. Addressed specifically to the person to whom offer is
being made

c. Sent to only such person in writing / electronically
d. Within 30 days of recording names in the list
e. No person other than the addressee allowed to apply
through application form
f. Value of offer / invitation per person not less than Rs.
20,000 of face value of the security
g. To also comply with requirement of contents of notice
about renunciation etc.
11. Maintain record of offer letters in Form No. PAS-5.
12. File offer letter with ROC along with record of offer letters within
30 days of circulation of offer letter.
13. Amount against offer to be received only by cheque / demand

draft / other banking channels but not by cash – only from the
bank account of the subscriber.
14. Company to maintain record of the bank account from which

payments received.
15. In case of joint holders, payment was received from first

applicant only.
16. Allotment was completed within 12 months from date of passing

special resolution. If not, another special resolution was passed
to complete allotment.
17. Where convertible securities are offered, price of resultant shares

shall be determined beforehand on basis of valuation report.
18. Board resolution to specifically contain authority for issuance of

share certificates to 2 directors and CS / one authorized person.
One of the two directors should be director other than MD /
WTD.
19. Share application money was kept in separate bank account and
was utilized only for (a) adjustment against allotment or (b)
repayment.
20. Return of allotment in Form No. PAS-3 within 30 days.
21. Share certificates to be issued within 2 months of allotment of

shares / 6 months of allotment of debentures.
22. Entry in Register of Members.

23. In case of consideration other than cash, accounting treatment as
specified in Rules, was complied.
24. In case a charge is required to be created in connection with the

issue of the securities, check if the same has been done in
accordance with the provisions of the Act and other applicable
legal requirements and prescribed returns have been filed.
25. In case of listed company, regulations made by SEBI has been

complied with (Checklist given in separate chapter of SEBI
Regulations)

Date: Date:
 Special Resolution with Explanatory Statement and minutes thereof
 Valuation Report
 Copy of offer letter
 Record of Bank account from where payments for subscription have been received
 Board resolution giving authority to sign the share certificates
 PAS-3, PAS-4, PAS-5, SH-6, MGT-14
Checklist : Issue of Capital and Securities
Bonus issue (section 63)
1. Check whether it is authorised by its articles;

2. Whether it has, on the recommendation of the Board, been
authorised in the general meeting of the company;
3. Whether the company has defaulted in payment of interest or
principal in respect of fixed deposits or debt securities issued by
it;
4. Whether it has defaulted in respect of the payment of statutory
dues of the employees, such as, contribution to provident fund,
gratuity and bonus;
5. Whether the partly paid-up shares, if any outstanding on the date
of allotment, have been made fully paid-up;

6. Whether the bonus is declared only out of
a. Free reserves
b. Securities Premium Account
c. Capital Redemption Reserve Account
and not out of revaluation reserve created out of
revaluation of assets.
7. Ensure that the company which has once announced the decision
of its Board recommending a bonus issue does not subsequently
withdraw the same;
8. Check whether Return of allotment is filed with the registrar in
Form No. PAS.3

Date: Date:
 Register of fixed deposits
 Auditor’s Report
 PAS-3, MGT-14
Checklist: Issue of Sweat Equity Shares (Section 54)
1. Section 2 (88) defines “sweat equity shares” so as to mean such

equity shares as are issued by a company to its directors or
employees at a discount or for consideration, other than cash, for
providing their know-how or making available rights in the
nature of intellectual property rights or value additions, by
whatever name called
2. In case of Listed Company, ensure that the issue of Sweat Equity

Shares is in compliance with the SEBI (Issue of Sweat Equity)
Regulations, 2002.
In case of an unlisted company
3. The issue is authorised by a special resolution passed by the

company, ensuring that the special resolution authorising the
same is valid for making the allotment within a period of not
more than twelve months from the date of passing of the special
resolution.
4. Explanatory statement to be annexed to the notice of the general

meeting contains the specified particulars [Rule 8 of the
Companies (Share Capital and Debenture) Rules, 2014].
5. Not less than one year has, at the date of such issue, elapsed since
the date on which the company had commenced business.
6. The company has not issued sweat equity shares for more than
fifteen percent of the existing paid up equity share capital in a
year or shares of the issue value of rupees five crores, whichever
is higher. Further it is to be ensured that the issuance of sweat
equity shares in the Company has not exceeded twenty five
percent, of the paid up equity capital of the Company at any time.
7. The Sweat Equity Shares to be issued are valued at a price
determined by a registered valuer.
8. The Sweat Equity Shares issued are locked in / non transferable
for a period of three years from the date of allotment. The fact
and the period of lock in is stamped in bold on such share
certificates.
9. The amount of Sweat Equity shares issued is included as a part of
managerial remuneration while calculating the limits. 10.Details
as per Rule 8(13) of Companies ( Share Capital and Debentures)
Rules, 2014 of the Sweat Equity shares are mentioned in the
Director’s Report .
10. The company is maintaining Register of Sweat Equity Shares in

Form No. SH.3
11. The Register of Sweat Equity Shares is maintained at the

registered office of the company or such other place as the Board
may decide.
12. The entries in the register are authenticated by the Company

Secretary of the company or by any other person authorized by
the Board for the purpose.

Date: Date:
 Special Resolution with Explanatory Statement
 Approvals of registration from sectoral regulators such as RBI, SEBI etc.
 Valuation Report
 INC-21, SH-3
 PAS-3, MGT-14

Checklist : Calls on Shares/Debentures
1. call on shares/debentures was made by the Board of directors by

means of resolutions passed at the Board meeting;
2. call on shares/debentures complied with the stipulations

contained in the Articles of Association;
3. the Board of directors approved the rate of interest payable on

delayed payment of calls in conformity with the provisions
contained in the Articles of Association.

Date: Date:
 Minutes of Board meeting
 Copies of Call letter
 Proof of dispatch of call letters
Checklist : Buy-back of Shares / Securities (Section 68)
Buy Back by Unlisted companies :
1. The offer for buy back is not made within 1 year of closure of
preceding offer of buy back.
2. The Articles of association authorize buy back of securities. If not,

a special resolution for amending the articles of association under
section 14 of the Companies Act, 2013 has been passed by the
company in general meeting.
3. Form No. MGT.14 as per Companies (Management and

Administration) Rules, 2014 has been filed with RoC within 30
days of passing the special resolution.
4. In case, buy back of securities are upto 10% of total paid up

equity capital & free reserves, whether a board resolution was
passed authorizing the buy-back.
5. A special resolution has been passed in general meeting,

authorizing the board to buy-back.
(Note: This is not applicable in case the buy- back is ten percent or
less of the paid up capital and free reserves of the company)

6. The explanatory statement is required to be annexed to the notice
of general meeting pursuant to section 102 contains the
disclosures mentioned in the rule 17 (1) of the Companies (Share
Capital and Debentures) Rules, 2014 in this behalf.
[Note: Refer Rule 17(1)]
7. After passing of special resolution but before buy-back, the letter

of offer has been filed with RoC in Form No. SH.8 with the
requisite fee.
8. The letter of offer has been dated and signed on behalf of the
board by not less than two directors of the company, one of
whom shall be the managing director, where there is one.
9. The shares or other securities so bought back are extinguished

and physically destroyed within seven days of the completion of
buy-back.
10. The declaration of solvency required pursuant to section 68 (6) of

the Companies Act, 2013 has been filed in Form No. SH.9 as per
Companies (Share Capital and Debentures) Rules, 2014 with RoC.
11. The declaration of solvency has been signed and verified by

atleast two directors, one of whom shall be the managing director
of the company, if any.
12. The company maintains a register of shares or other securities

which have been bought back in Form No. SH. 10 as per
Companies (Share Capital and Debentures) Rules, 2014.
13. The company has filed a return within 30 days of completion of

buy-back in Form No. SH.11 as per Companies (Share Capital and
Debentures) Rules, 2014 with RoC and in case of a listed
Company with the Securities and Exchange Board of India.
14. The certificate of compliance in Form No. SH.15 signed by two

directors of the company including the managing director, if any,
and verified by Company Secretary in Practice is annexed to the
return filed with RoC in Form No. SH.11.

15. The company has not issued shares of the same kind within a
period of 6 months except by way of bonus issue or discharge of
subsisting obligation.

Date: Date:
 Minutes of Board meeting
 Notice authorising buy-back alongwith explanatory statement
 Letter of offer (SH-8)
 Declaration of Solvency (SH-9)
 Register of shares/other securities bought back (SH-10)
 Return of Buy-back (SH-11)
 Certification of Compliance (SH-15)
 MGT-14
Checklist : Debentures (Section 71)
1. An issue of secured debentures may be made, provided the date

of its redemption does not exceed ten years from the date of
issue.
A company engaged in the setting up of infrastructure projects
may issue secured debentures for a period exceeding ten years
but not exceeding thirty years (Rule 18 Companies (Share Capital
and Debentures) Rules, 2014.
 In case of any issue of debentures by a Government
company which is fully secured by the guarantee given by
the Central Government or one or more State Government
or by both, the requirement for creation of charge shall
not apply.
 In case of any loan taken by a subsidiary company from
any bank or financial institution, the charge or mortgage
may be created on the properties or assets of the holding
company.
2. The company has appointed a debenture trustee before the issue

of prospectus or letter of offer for subscription of its debentures.

3. A trust deed in Form No. SH. 12 or as near thereto as possible has
been executed by the company issuing debentures in favour of
the debenture trustees within three months of closure of the or
offer.
4. The company has created a Debenture Redemption Reserve for
the purpose of redemption of debentures in accordance with the
conditions specified in sub rule (7) of rule 18 of the Companies
(Share Capital and Debentures) Rules, 2014.
5. In case, any amount received by a company against issue of
commercial paper or any other similar instrument issued in
accordance with the guidelines or regulations or notification
issued by the Reserve Bank of India, Rule 18 shall not apply.
6. In case of any offer of foreign currency convertible bonds or
foreign currency bonds issued in accordance with the Foreign
Currency Convertible Bonds and Ordinary Shares (Through
Depository Receipt Mechanism) Scheme, 1993 or regulations or
directions issued by the Reserve Bank of India, Rule 18 shall not
apply, unless otherwise provided in such Scheme or regulations
or directions.
Date: Date:

 Notice alongwith explanatory statement
 Charge documents
 Prospectus or letter of offer for subscription of debentures
 Written consent from debenture trustee
 Requisition signed by debenture holders for meeting
 Trust deed (SH-12)
 Financial Statement
Checklist : Issue and redemption of preference shares (section 55)
1. A company is authorized by its articles to issue preference shares.

2. The preference shares shall be liable to be redeemed within a
period not exceeding twenty years. A company engaged in the
setting up and dealing with or infrastructure projects may issue
preference shares for a period exceeding twenty years but not
exceeding thirty years, subject to the redemption of a minimum

of ten per cent of such preference shares per year from the
twenty first year onwards or earlier, on proportionate basis, at
the option of the preference shareholders.
3. The issue of preference shares has been authorized by passing a
special resolution in the general meeting of the company;
4. The explanatory statement to be annexed in the notice of general
meeting shall provide complete material facts concerned with and
relevant to the issue of preference shares including details
mentioned in sub-rule (3) of rule 9 of the Companies (Share
Capital and Debentures) Rules, 2014.
5. The company, at the time of such issue of preference shares has
no subsisting default in the redemption of preference shares
issued either before or after the commencement of the Act or in
payment of dividend due on any preference shares.
6. The resolution for issue of preference shares has set out the
following matters:
(a) priority with respect to payment of dividend or
repayment of capital vis-a-vis equity shares;
(b) participation in surplus dividend;
(c) participation in surplus assets and profits, on winding-up
which may remain after the entire capital has been
repaid;
(d) payment of dividend on cumulative or non-cumulative
basis.
(e) conversion of preference shares into equity shares.
(f) voting rights.
(g) redemption of preference shares.
7. All the terms of issue of Preference shares other than those

prescribed , such as when the preference dividend shall be due
etc are clearly defined

Date: Date:
 Financial statement
 Notice with explanatory statement
 Minutes of General Meeting
 Register of Members

Checklist
IV. TRANSFER AND TRANSMISSION OF SHARES AND OTHER SECURITIES AND RELATED
MATTERS.
Issue of Certificates for Shares and other Securities (Section 46)
1. The company has allotted shares/debentures and entered the

names of allottees in the register of members/debenture
holders;
(Note: where the register and index of beneficial owners is
maintained by a depository it shall be deemed to be
corresponding to the register of members)
2. The company has issued and delivered share certificates as per

section 46 of the Act;
3. The company has executed Debenture Trust Deed in case of

secured debentures;
4. The company has complied with delivery of certificates within

the time limits prescribed under section 56(4).
5. Proper stamp duty has been paid.
6. The certificates are issued in accordance with the provisions of

the Articles of Association.

Date: Date:
 Register of renewed or duplicate shares certificate (SH-2)
 Minutes of Board Meetings
 Letter of Allotment or fractional coupons
 Letter of acceptance or of renunciation
Checklist: Transfer and Transmission of Shares (Section 56)
I. Transfer of Shares
1. The requirements contained in the Articles of Association have

been complied with;

2. The transfer of shares/debentures and the issue of certificates
thereof have been made within the time stipulated under section
56 in accordance with the procedures prescribed;
3. The company receives instrument of transfer in Form No.SH-4 in

respect of physical form of securities.
4. An application has been made in respect of partly paid up shares

of the company. If yes, the company has given notice of
application in Form No. SH-5 to the transferee and received no
objection to the transfer.
5. The company has taken indemnity in respect of instrument of

transfer that has been lost or not delivered within the prescribed
limit.
6. Entries in the register of transfers have been made from time to

time.
7. All transfers have been properly included in the Annual Return.
II. Transmission of shares
8. The shares have been transmitted to the legal representative of

the deceased shareholder in the case of death of a sole
shareholder and in the case of joint holdings only to the
survivor(s).
9. Transmission of shares is effected upon the production of

succession certificate or probate or letter of administration or
indemnity duly signed by the legal heirs of the deceased or as per
procedure stipulated by the Board of directors and/or Articles of
Association.

Date: Date:
 Instrument of transfer (S.H. 4)

 Notice to transferee (S.H. 5)
 Share certificates
 Letter of Allotment of Securities
 Order of Court/ Tribunal/ other authority, if any

Checklist
V. DEPOSITS (Chapter V)
1. The Company has not accepted any deposits which is repayable

on demand or upon receiving a notice within a period of less
than six months or more than 36 months from the date of
acceptance or renewal of deposit. If, so accepted, the company
has complied with the conditions prescribed in rule 3 of the
Companies (Acceptance of Deposits) Rules, 2014.
2. The company referred to in section 73(2)has issued circular to all
its members by registered post acknowledgement due or speed
post or by electronic mode in Form No. DPT-1, while intending to
invite deposits from them.
3. The company referred to section 76, being an eligible Company as
defined under the Rules, has issued circular in the form of
advertisement in Form DPT-1.
4. The form of application contains a declaration by the intending
depositor to the effect that the deposit is not being made out of
any money borrowed by him from any other person.
5. Whether the company filed Return of deposits with the Registrar
in Form No. DPT-3
6. The company(accepting deposits form members or eligible
companies)has entered into a contract for providing deposit
insurance as prescribed in Rule 5.
7. The company has provided for security by way of charge as
prescribed in Rule 6.
8. The company has executed deposit trust deed in Form No. DPT-2
at least seven days before issue of circular or advertisement.
Date: Date:
Indicative list of documents to be checked
 Circulars inviting deposits (DPT- 1)

 Newspaper clippings
 Minutes of board meetings
 Contract of deposit insurance
 Instrument creating charge
 Written consent from trustee for depositors
 Deposit trust deed (DPT-2)
 Written requisition calling meeting of depositors

 Application form for deposits
 Receipts of amount received by company
 Register of deposits
 Return of deposit (DPT-3)
 Statement regarding deposits (DPT-4)
Checklist
VI. CHARGES (Chapter VI)
1. The company has registered the particulars of creation or

modification of charge with the Registrar within thirty days of its
creation or modification or within the extended period after
payment of additional fees; [Form No.CHG-1 (for other than
Debentures) or Form No.CHG-9 (for debentures including
rectification of particulars)].
2. The copy of every instrument evidencing any creation or
modification of charge required to be filed with the Registrar has
been verified as per Rule 3(4) of the Companies (Registration of
Charges) Rules, 2014.
3. The company has reported satisfaction of charge to the Registrar
within the period of thirty days of its payment/ satisfaction in
Form No.CHG-4 and obtained certificate of registration of
satisfaction of charge in Form CHG-5.
4. The notice of appointment or cessation of a receiver of, or of a
person to manage, the property, subject to charge, of a company
has been filed with ROC in Form No. CHG-6.
5. The company has maintained the register of charges in Form
No.CHG -7.
6. The application for condonation of delay, if any, has been filed
with the Central Government in Form No.CHG-8.
7. The order passed by Central Government w.r.t. condonation of

delay has been filed with the ROC in Form No.INC-28.

Date: Date:

 Instrument creating / modifying charge (CHG-1 or CHG-9)
 Application for delay (CHG-1)

 Certificate of Registration (CHG-2)
 Certificate of modification (CHG-3)
 Register of charge
 Satisfaction of charge (CHG-4)
 Certificate of registration of satisfaction (CHG -5)
 Notice of appointment/ Cessation of securities (CHG-6)
 Copy of filing of order (INC-28)
 Register of charges (CHG-7)
 Application for Condonation of delay (CHG-8)
Checklist
VII. MEETINGS OF DIRECTORS/COMMITTEES THEREOF, SHAREHOLDERS AND OTHER
STAKEHOLDERS.
[Note: Adherence by a company to Secretarial Standards with respect to General and Board
meetings specified by the Institute of Company Secretaries of India and approved as such by
the Central Government is mandatory, as per the provisions of sub-section (10) of Section
118 of the Companies Act, 2013.
In terms of section 205(1)(6), it is the function of the Company Secretary to ensure that the
company complies with the applicable Secretarial Standards. The Company Secretary in
Practice, while carrying out secretarial audit must, therefore, examine compliance with the
applicable clauses of the Secretarial Standards.
Separate chapter namely ‘Secretarial Standards under the Companies Act, 2013’ is provided
in this Guidance Note.]
Meetings of directors/committees
1. the requisite number of Board meetings as required under

section 173 the Act were held during the year;
2. notice of each Board meeting in writing was issued to all the
directors;
3. attendance records are maintained and the requirements of
Board meetings regarding quorum, chairman, minutes etc., have
been complied with and leave of absence is granted to Directors
who have requested for the same;
4. the items required to be transacted only at the meeting of the
Board were transacted at the meeting. Following is the list of
resolutions which are required to be passed only at the board
meeting:
a) Resolutions for exercising following powers:
i. Make call
ii. Buy back of securities

iii. Issuing securities
iv. Borrowing monies
v. Investing funds
vi. Granting loans/ giving guarantees/providing
securities
vii. Approving financial statement and Board’s report
viii. Diversifying business
ix. Approving amalgamation / merger /
reconstruction
x. Taking over of a company/acquiring control in
substantial stake in another company.
xi. Making political contributions
xii. Appointing or removing KMP
xiii. Appointing internal auditor
xiv. Appointing secretarial auditor
xv. Serial No. (i to x) are as per section 179(3) and
Serial No. (xi-xiv) above are as per Companies
(Meetings of Board and its Powers) Rules, 2014.
5. Form MGT 14 has been filed for every such resolution passed at
the Board Meeting
6. Whenever a director is appointed on the Board , he has given a

Disclosure of Interest in Form MBP 1and every time thereafter
when there is any change therein.
7. Every director has disclosed his interest at the Board meeting
where contract or arrangement is considered in which he is
directly or indirectly interested and the interested director has
abstained from participating or voting at such meeting.
8. The notices of disclosure of general interest under section 184
have been received from all the directors in form no. MBP-1 and
were, placed before and read at the first Board meeting in each
financial year.
9. Entries thereof have been made in the Register of Contracts or
arrangements in which Directors are interested in pursuance to
section 189 and noted by the Board and such disclosures have
been renewed every year;
10. If the Board had constituted any committees; whether
requirements regarding quorum, chairman, minutes, etc., of
committee meetings were duly complied with;
11. Resolutions by circulation have been approved in accordance
with the provisions of the Act and in cases where it was required
by the requisite number of Directors to be taken up at a Board
meeting, whether the same has been taken up at a Board meeting;

12. The resolutions passed by circulation were put up at the next
Board meeting for taking note of the same and has been made
part of the minutes;
13. All directors have given a declaration in Form DIR-8 about their
not being disqualified to act as a Director at the beginning of each
financial year and such declarations have been placed before the
Board and taken note of;
14. Independent Directors have given declaration about having met
the criteria of independence.
15. The director has attended atleast one board meeting in a year
either in person or through video conferencing.
16. Whether the company follows sufficient Board practices to
ensure meaningful participation of Board members.
Date: Date:
 Notice of Board Meetings / Committee Meetings.

 Intimation to stock exchanges regarding Meetings of Directors.
 Proof of sending notice of Board Meeting.
 Minutes of Board Meetings/ Committee Meetings.
 Declaration of independence by Independent directors.
 DIR-8, MBP-1, MBP-2, MBP-4
Checklist on Meetings of Board through video conferencing or other audio visual means
(Section 173 read with Rule 3 and Rule 4 of the Companies (Meeting of Board and its
Powers) Rules, 2014)
1 The company has made necessary arrangements to avoid failure

of video or audio visual connection
2 Sufficient security and identification procedures were ensured to

safeguard the integrity of the meeting by the Company
Secretary/Chairman.
3 The Chairman/Company Secretary has taken reasonable care to

ensure availability of proper video conferencing or other audio
visual equipment or facilities for providing transmission of the
communications for effective participation of the directors and
other authorised participants at the Board meeting.

4 Proper arrangements were made to record proceedings and
prepare the minutes of the meeting.
5 Proper arrangement were made for safekeeping and marking the

tape recording(s) or other electronic recording as part of the
records of the company.
6 Proper system security and physical security arrangement were

made to ensure that no person other than the concerned
director(s) is attending or has access to the proceedings of the
meeting through video conferencing mode or other audio visual
means.
7 Participants attending the meeting through audio visual means

were able to hear and see the other participants clearly during
the course of the meeting:
8 The differently abled director was allowed a person to

accompany him at his request and it was ensured that such
person maintains confidentiality of the matters discussed at the
meeting.
9 The notice of the meeting was sent to all the directors in

accordance with the provisions of sub-section (3) of section 173
of the Companies Act, 2013.
10 The notice of the meeting contained the information regarding

the option available to the directors to participate through video
conferencing mode or other audio visual means, where the
facility is provided by the company.
11 The intention of the director intending to participate through
video conferencing or audio visual means was received by the
Chairperson or the company secretary of the company well in
advance.
12 At the commencement of the meeting, a roll call was taken by the
Chairperson when every director participating through video
conferencing or other audio visual means stated the following
namely:-
(a) name;
(b) the location from where he was participating;
(c) that he had received the agenda and all the relevant
material for the meeting; and
(d) that no one other than the concerned director was
attending or having access to the proceedings of the
meeting at the location mentioned in clause (b).

13 After the roll call, the Chairperson or the Company Secretary
informed the Board the names of persons other than the
directors who are present for the said meeting at the request or
with the permission of the Chairperson and confirmed that the
required quorum was complete.
14 The required disinterested quorum was present throughout the

meeting.
15 The participating Directors had given their consent for recording

of their signature in the statutory registers where such registers
are required to be signed by them and it was so recorded in the
minutes.
16 The participating director introduced himself at the time of

speaking on any agenda item and in case of any interruption, the
director repeated his statement.
17 In case of an objection on a motion, roll call was made by the

Chairperson and vote of each director was recorded only on
identification by the director.
18 At the end of discussion on each agenda item, the Chairperson of

the meeting announced the summary of the decision taken on
such item along with names of the directors, if any, who dissented
from the decision taken by majority. The minutes of the meeting
had disclosed the particulars of the directors who attended the
meeting through video conferencing or other audio visual means.
19 The draft minutes of the meeting were circulated among all the
directors within fifteen days of the meeting.
20 Every director who attended the meeting, whether personally or

through video conferencing or other audio visual means, has
confirmed or given his comments in writing, about the accuracy
of recording of the proceedings of that particular meeting in the
draft minutes, within seven days or some reasonable time as
decided by the Board, after receipt of the draft minutes failing
which his approval shall be presumed.
21 After completion of the meeting, the minutes had been entered in

the minute book as specified under section 118 of the Act and
signed by the Chairperson.
None of the following matters were dealt with in the meeting

held through video conferencing or other audio visual means.-

(i) the approval of the annual financial statements;
(ii) the approval of the Board’s report;
(iii) the approval of the prospectus;
(iv) the Audit Committee Meetings for consideration of
financial statement including consolidated financial
statement, if any, to be approved by the Board; and
(v) the approval of the matter relating to amalgamation,
merger, demerger, acquisition and takeover.
Date: Date:
Checklist
Minutes Book of Meetings of Directors/Members (Section 118)
1. All appointments made at the meeting are included in the

minutes.
2. Names of the directors who are present at the meeting are
recorded in the minutes.
3. Names of the directors dissenting from or not concurring were
recorded.
4. The pages of the minutes book have been consecutively
numbered.
5. Each page of minutes of proceedings of a meeting of the Board or
of a committee thereof is initialled or signed and the last page of
the record of proceedings of each meeting is dated and signed by
the chairman of the said meeting or the chairman of the next
succeeding meeting.
6. Each page of minutes of proceedings of a general meeting is
initialled or signed and the last page of the record of proceedings
of each meeting is dated and signed by the chairman of the same
meeting or by a director authorized within the aforesaid period of
thirty days.
7. The minute books of general meetings, meeting of creditors, the
minutes books of the Board and committee meetings are
maintained in the custody of the company secretary or any
director duly authorised by the Board. Ensure Resolutions passed
by postal ballot are recorded in the minute book of General
Meetings.
8. In case directors have participated in any Board Meeting by video
conference or other audio visual means check, whether complied
with the checklist relating to meetings of Board through video
conferencing or other audio visual means.

Checklist : ANNUAL GENERAL MEETING - Notice, Conduct of the meeting and minutes
(Section 96)
Annual General Meeting
1 The provisions of section 96 of the Companies Act. 2013 read with

the Companies (Management and Administration) Rules, 2014,
Listing Agreement, if applicable, etc have been complied with.
2 The first AGM is held within a period of nine months from the date
of closing of the first financial year of the company.
3 Subsequent AGM was held in each case, within a period of six
months from the date of closing of the financial year.
The provision of Section 91 of the Companies Act read with

Companies (Management and Administration) Rules, 2014. Listing
Agreements if applicable have been complied with.
4 The meeting was held within 15 months of the last annual general
meeting.
5 AGM was called during business hours, that is, between 9 a.m. and
6 p.m. on any day that is not a National Holiday.
6 The AGM was held either at the registered office of the company or
at some other place within the city, town or village in which the
registered office of the company is situate.
7 Notice convening the meeting specifically mentioned that it was
AGM.
8 Extension for holding the meeting was obtained from the
Registrar, where applicable.
9 In case of requisitioned meeting, provisions of section 100 read
with rule 17 of the Companies (Management and Administration)
Rules, 2014 were complied with.
10 Notice of 21 clear days was given for the meeting.
11 Consent of alteast 95% of the members was obtained for

convening the meeting at shorter notice.
12 Day, Date and hour of the meeting were mentioned in the notice
alongwith the statement of business to be transacted.
13 Notice was given to

a. Every member/ assignee of insolvent member/legal
representative of the deceased member

b. Auditor
c. Director
14 Explanatory statement setting out material facts was attached to
the notice in respect of special business as contemplated by
section 102.
15 Appropriate quorum i.e. 2/5/15/30 as the case may be, was

present at the meeting.
16 If meeting was adjourned for want of quorum, section 103(2) was

complied with.
17 The provisions of the articles as to Chairman were complied with.
18 None of the proxies represented more than 50 members.
19 Appropriate statement in respect of proxies appeared in the

notice.
20 Instrument of proxy was in the prescribed form.
21 Inspection of Proxy register was offered to the members within

24hours before the meeting as well as during the meeting.
22 None of the members was prevented from voting except where

company had exercised its right of lien/ calls were due.
23 Voting through electronic means was carried out in compliance

with relevant rules.
24 Poll was conducted in compliance with section 109.
25 Postal Ballot was conducted in compliance with the provisions of

section 110.
26 Members’ resolution were circulated in compliance with section

111.
27 Resolution requiring special notice had the backing of members

holding atleast 1% of the voting power/holding shares of Rs.
5,00,000.
Secretarial Standards with regard to AGM has been complied with.
28 Report of Annual General Meeting was filed in Form MGT 15 by all

the listed public companies within 3days of the conclusion of AGM.

Date: Date:

 Minutes of Board Meetings.
 Notice of Annual General Meetings.
 Register of Proxies.
 Attendance Register.
 Application for extension of date of holding AGM, if any
 Approval of extension of date to hold AGM from ROC.
 Proof of sending notice.
 Advertisement regarding Book Closure.
 Filings with stock exchange.
 Minutes of AGM & report of AGM.
Checklist
IX. DIVIDEND (Chapter VIII)
1 The amount of dividend, including interim dividend, was

deposited in a scheduled bank in a separate account within five
days from the date of declaration of such dividend.
2 The company has paid dividend within 30 days from the date of
declaration.
3 The company has transferred the total amount of dividend which

remains unpaid or unclaimed within 30 days from the date of
declaration to unpaid dividend account, within seven days from
the expiry of the said 30 days.
4 The company has prepared a statement containing the names and

other details to whom the unpaid dividend is to be paid alongwith
the amount of unpaid dividend and place the same on the website
of the company and also on any other web-site approved by the
Central Government for this purpose, within 90 days.
5 In case of inadequate profits or absence of profits, the rate of

dividend declared has not exceeded the average at the rates at
which dividend was declared by it in the three years immediately
preceding that year.
6 The company has not declared and paid any dividend from
reserves other than free reserves as defined in section 2(43).
7 Ensure that carried over previous losses and depreciation not

provided in previous year(s) are set off against profits of the
Company of the current year.

8 The dividend is paid by the company by cheque or warrant or by
any electronic mode.
9 The company has before declaration of dividend transferred such

percentage of profits to reserves as decided.
10 The company has transferred the amount remaining unpaid or

unclaimed for a period of seven years from the date of transfer to
the Unpaid Dividend Account to the Investor Education and
Protection Fund and has filed the Statement of amounts credited
to IEPF in Form No. DIV-5.
11 The company has followed the procedures prescribed in Rule 3

before the dividend is declared out of reserves (as applicable).

Date: Date:
 Statement containing names of unpaid dividends
 Website of company
 Statement of transfer of unpaid dividend A/c to IEPF with receipt
 Bank account details of scheduled bank
 Details of payment of dividend
 Details of unpaid dividend account
Checklist
X. CORPORATE SOCIAL RESPONSIBILITY (CSR)
[Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014]
1 The company having net worth of rupees five hundred crore or

more, or turnover of rupees one thousand crore or more or a net
profit of rupees five crore or more during any financial year has
constituted a Corporate Social Responsibility Committee of the
Board consisting of three or more directors, out of which at least
one director is an independent director.
2 The Board has approved the CSR Policy including a list of CSR
projects or programmes within the purview of schedule VII as well
as the monitoring process of such projects or programmes as
recommended by CSR Committee.

3 The Composition of CSR Committee is disclosed in the Board’s
Report.
The CSR activities were under taken as per its stated CSR policy, as
projects, programs or activities excluding activities undertaken in
pursuance of its normal course of business.
4 The company has instituted a transparent monitoring mechanism

for implementation of the CSR projects or programs or activities
undertaken by the company.
5 The company has disclosed the contents of the policy in Board’s

report and at its website, if any.
The Board’s report includes an annual report on CSR containing
prescribed particulars.
6 In case the company does not spend the specified amount (i.e. at
least two percent of the average net profits made during the
immediately preceding three financial years), Board’s report
specifies the reason for not spending.
7 The company has complied with the procedure specified under

rules.

Date: Date:
 Indicative list of documents to be checked:

 Balance sheet and P&L account
 Minutes of CSR Committee
 Company website, if any.
Checklist
XI. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
1 The number of directors is as per the provisions of section 149 of

the Act.
2 Under Rule 3 of the Companies (Appointment and Qualification of

Directors) Rules, 2014), the company has appointed at least one

woman director, if the company falls under any one of the
following categories -
(i) a listed company;
(ii) other public company having -
(a) paid–up share capital of one hundred crore
rupees or more; or
(b) turnover of three hundred crore rupees or
more:
3 The company being a listed company has at least one-third of the
total number of directors as independent directors or such higher
number as specified in the listing agreement.
4 If the company falls under the following class or classes of
companies, whether the company has at least two directors as
independent directors -
(i) the Unlisted Public Companies having paid up
share capital of ten crore rupees or more; or
(ii) the Unlisted Public Companies having turnover of
one hundred crore rupees or more; or
(iii) the Unlisted Public Companies which have, in
aggregate, outstanding loans, debentures and
deposits, exceeding fifty crore rupees:
5 In case it is a listed company, whether it has any director elected
by small shareholders and if so, whether such appointment is in
compliance with rule 7 of the Companies (Appointment and
Qualification of Directors) Rules, 2014).
6 The company is following the provisions for determination of

office of directors by retirement by rotation (Section 152).
7 The company has ensured the eligibility of directors for election to

the office of a director (Section 160).
8 The appointment of additional director, alternate and nominee

director, filling up of casual vacancies has been done as provided
in section 161.
9 The company has ensured that the appointment of directors is

voted individually (Section 162).
10 The company has received the consent to act as directors (Section

152) and Form DIR.2 was filed for appointment of director.
11 None of the directors is disqualified from being appointed as a

director (Section 164).
12 None of the directors has vacated office during the year (Section
167).

13 The provisions of section 168 were complied with at the time of
resignation of director.
14 None of the directors was removed from the Board.
15 If the company is either a listed company or any other public
company having a paid-up share capital of ten crore rupees or
more, if yes, it has appointed whole-time key managerial
personnel and filed a return as per DIR 12 with registrar within
thirty days of such appointment or of any changes therein.
A company other than the companies covered above, which has a
paid up share capital of five crore rupees or more, has appointed a
whole-time company secretary.
16 Appointment of key managerial personnel is made by a board
resolution.
17 If the company has appointed a managing director, whole-time
director or manager, whether it has complied with the provisions
of Chapter XIII of the Act read with Schedule V.
18 Whether the company has complied with section 203 with respect
to appointment of a manager or managing director.
19 Check whether the provisions relating to appointment and
remuneration of Managerial Persons are complied under sections
196, 197, 203 and Schedule V.
20 Ensure that as per section 197, the total managerial remuneration
payable by a public company does not exceed 11% of the net
profits of the company and where the limit is exceeded, the same
is approved in general meeting and approved by the Central
Government. It must be noted that if a company has no profits or
when its profits are inadequate, the company shall pay no
remuneration to its directors, except in accordance with schedule
V.
21 Ensure that the procedural aspects relating to appointment of
managing director or whole-time director or manager including
the filing of the necessary returns are complied with.
Date: Date:
 Minutes papers of Board Meetings
 Notice and minutes of Annual General Meeting, Report of AGM
 Register of directors and KMP
 DIR-2, DIR-6, DIR-8, DIR-9 (if any), DIR-10 (if any), DIR-11, DIR-12

 Declaration of independence given by Independent Directors
 Filings with Stock Exchanges
 Balance sheet and P&L account and Board’s Report
Checklist : Resignation of director (Section 168)
1 The letter of resignation of the director is received by the

company.
2 The Board takes note of the resignation and intimates the

Registrar in Form DIR-12 within thirty days from the date of
receipt of notice of resignation.
3 The information about the resignation is posted on the website of

the company, if any.

Date: Date:
Checklist: Retirement of Directors
1 One third of such directors for the time being as are liable to retire
by rotation, or if their number is not three or a multiple of three,
then, the number nearest to one third, retired from office at first
annual general meeting and at every subsequent annual general
meeting. (Note: in calculating the total number of directors,
independent directors should not be included)
2 The directors retiring by rotation are those who have been longest
in office since their last appointment.
3 Between directors appointed on the same day, the retirement was,
in default of and subject to any agreement among themselves,
determined by draw of lots.
4 The company has filled up such vacancy by appointing the retiring
director or some other person.
5 The director has expressed his willingness for his reappointment.
6 The provisions of the Act, Articles of Association and other
applicable rules have been complied with.

Date: Date:

80
 Register of directors and KMP
 Notice and minutes of Annual General Meeting, Report of AGM
 DIR-2, DIR-6, DIR-8, DIR-9, DIR-10 (if any), DIR-12
Checklist: Removal of Director (Section 169)
1 A special notice as required under sub-section (2) of section 169

was given to the company to remove a director.
2 The special notice was signed by member(s) holding not less than
one percent of total voting power or holding shares on which an
aggregate sum of more than five lakh rupees has been paid up.
3 The company has sent forthwith a copy thereof to the director

concerned and the director was provided opportunity to be heard
on the resolution at the meeting.
4 The representation, if any, made by concerned director was

notified to the members on the request of the director along with
the notice of the resolution.
5 If the copy of the representation was not sent because the same
was received too late or because of company’s default, it was read
out at the meeting.
6 The director who was removed from office was not reappointed
as a director by the Board of directors.

Date: Date:
 Special notice received

 Notice and minutes of Annual General Meeting/EGM, , Report of General Meeting
 DIR-2, DIR-6, DIR-8, DIR-9, DIR-10 (if any), DIR-12

81
Checklist
XII. LOANS TO DIRECTORS, ETC. AND RELATED PARTY TRANSACTIONS (Section 185 &
188)
Loans
1 The company has not directly or indirectly advanced any loans to

its directors or any other person in whom the director is
interested or given any guarantee or provided any security in
connection with any loan taken by him or such other person.
(other than to its wholly owned subsidiary company).
Any other person in whom director is interested means- (a) any
director of the lending company, or of a company which is its
holding company or any partner or relative of any such director;
(b) any firm in which any such director or relative is a partner; (c)
any private company of which any such director is a director or
member; (d) any body corporate at a general meeting of which
not less than twentyfive per cent. of the total voting power may
be exercised or controlled by any such director, or by two or
more such directors, together; or (e) any body corporate, the
Board of directors, managing director or manager, whereof is
accustomed to act in accordance with the directions or
instructions of the Board, or of any director or directors, of the
lending company.
2 If the loan is advanced to a Managing or Whole Time Director ,

check whether it is as a part of the conditions of service extended
by the company to all its employees or pursuant to any scheme
approved by the members by a special resolution.
Related Party Transactions
1 Check whether the company has prepared a list of related parties

as per section 2(76) of the Act and there exists a system to check
whether any contracts / arrangements are being entered into
with any of those Parties. Also any department wise mechanism
is derived to intimate the same to the secretarial department.
2 If the company is claiming exemption from the applicability of the
section on the grounds that the transactions are in the ordinary
course of business and are on arms length basis , check whether
the Board has taken an informed decision about the nature of
transaction based on criteria given in Rule 15
3 The company has entered into a contract/ arrangement with any
related party through a board resolution at a meeting of the
board.

82
4 The company has obtained prior approval of the shareholders by
a special resolution in case the paid up capital is ten crore or
more and wherever the other conditions specified in Rule 15
subsist.
5 Check that no member of the company who is the related party

with whom the transaction is being entered into, has voted on
such special resolution.
6 The company has annexed explanatory statement to the notice of

the board or general meeting as may be applicable disclosing the
details required under rule 15.
7 Check whether any director or related party is appointed as an

office or place of profit in the company , its subsidiary or
associate company and complied with the provisions.

Date: Date:

 MBP-1, MBP-2, MBP-3 and MBP-4
 Notice and minutes of AGM/EGM
 Balance sheet and Profit & Loss account; Board’s Report
 Auditor’s Report
Checklist
XIII. LOANS, INVESTMENTS, GUARANTEES AND SECURITIES (SECTION 186)
1 The board resolution/ special resolution has been passed with

respect to loans and investments by the company.
2 The company has not made investment through more than two
layers of investment companies.
3 The company has not defaulted repayment of deposit while
granting loans/ giving guarantee/ providing security.
4 The company has disclosed in the financial statements the full
particulars of the loans given investment made or guarantee
given or as prescribed under the Act.
5 The company maintains register containing the required
particulars in form MBP-2 at the registered office of the company.

83
6 The company has obtained prior approval of the public financial
institution, if term loan is subsisting.
7 Check that no loan is given at a rate of interest lower than the
prevailing yield of 1, 3, 5 or 10 year government security closest
to the tenor of the loan.
Date: Date:
 Notice and minutes of AGM/EGM
 MBP-2, MBP-3, DPT-3, DPT-4
Checklist
XIV: REGISTERS, FILING OF FORMS, RETURNS AND DOCUMENTS
Register of Renewed or Duplicate Share Certificate {Rule 6, Companies (Share Capital and
Debentures), Rules, 2014}
1 The renewed share certificate of any share or shares have not

been issued unless the certificate in lieu of which it is issued is
surrendered to the company.
2 Where certificates were issued in case of sub-division or
consolidated or in replacement of those which are defaced,
mutilated, torn or old, decrepit, worn out, or where the pages on
the reverse for recording transfers have been duly utilised,, the
renewed certificate states on the face of it, that it is “Issued in
lieu of share certificate No..... sub-divided/replaced/on
consolidation”.
3 Prior/Board consent was obtained before issuance of the
duplicate share certificate in lieu of those certificates that are lost
or destroyed.
4 The certificates issued under above stated circumstances state
prominently on the face of it that it is “duplicate issued in lieu of
share certificate No......”. and the word “duplicate” is stamped or
printed prominently on the face of the share certificate.
5 The entries relating to issuance of renewed/ duplicate certificates

are recorded in the Register for Renewed or Duplicate Share
Certificate.
6 In case of unlisted companies, the duplicate share certificates

84
were issued within a period of three months from the date of
submission of complete documents to the company.
In case of listed companies such certificate are issued within

fortyfive days, from the date of submission of complete
documents to the company.
7 The register for renewed or duplicate share certificates is

maintained in Form No. SH-2 in accordance with Companies
(Share Capital and Debentures) Rules, 2014 and is kept at the
registered office of the company or at such other place where the
Register of Members is kept.
8 Entries are incorporated simultaneously in the Register of

members maintained under section 88.
9 All entries made in the Register of Renewed and Duplicate Share

Certificates shall be authenticated by the company secretary or
such other person as may be authorised by the Board for the
purposes of sealing and signing the share certificate.
10 The register is preserved permanently and kept in the custody of

company secretary of the company or any other person
authorized by the Board for the purpose.

Date: Date:
 Minutes of Board Meetings/Meeting of Committee of Directors

 Register of renewed and duplicate share certificates in Form SH-2
Checklist: Register of sweat equity shares (Section 54) {Rule 8, Companies (Share Capital and
Debentures), Rules, 2014}
1 The company has maintained a Register of Sweat Equity Shares in

Form No. SH.3 in accordance with Companies (Share Capital and
Debentures) Rules, 2014.
2 The Register of Sweat Equity Shares is maintained at the
registered office of the company or such other place as the Board
may decide.
3 Whether the entries have been made forthwith.

85
4 The entries in the register are authenticated by the Company
Secretary of the company or by any other person authorized by
Date: Date:
Checklist: Register of Employee Stock Option (Section 62(1)(b)) {Rule 12, Companies(Share
Capital and Debentures), Rules, 2014}
1 The company has maintained a Register of Employee Stock

Options in Form No. SH.6 in accordance with Companies (Share
2 The Register of Employee Stock Options has been maintained at

the registered office of the company or such other place as the
Board may decide.
3 Whether the entries have been made forthwith.
4 The entries in the register are authenticated by the company

secretary of the company or by any other person authorized by

Date: Date:
Checklist: Register of shares or other securities bought-back (Section 68)
1 The Register of Shares or other securities bought back by the

company is maintained in Form No. SH.10 in accordance with
Companies (Share Capital and Debentures) Rules, 2014.
2 The register is maintained at the registered office of the company.
3 The custody of the register is with company secretary of the

company or any other person authorised by the Board in this
behalf.
4 The entries in the register are authenticated by the secretary of

the company or by any other person authorized by the Board.

Date: Date:

86
Checklist: Register of Deposits [Companies (Acceptance of Deposits) Rules, 2014]
1 The company has entered in the register, the entries specified

under Rule 14 of these rules.
2 The company has entered the particulars in the register within

seven days from the date of issuance of the receipt, in accordance
with the aforesaid rules.
3 The aforesaid receipt is duly authenticated by a director or

secretary of the company or by any other officer authorised by
the Board for this purpose.
4 The register is preserved in good order for a period of not less

than eight years from the financial year in which the latest entry
is made in the register.

Date: Date:
Checklist: Register of Charges (Section 85)
1 The company has maintained register of charges as per Form

CHG.7 in accordance with the Companies (Registration of
Charges) Rules, 2014.
2 The register contains particulars of all the charges registered

with the Registrar on any of the property, assets or undertaking
of the company.
3 The register contains the particulars of the property acquired

subject to a charge as well as particulars of any modification of a
charge and satisfaction of charge.
4 Entries in the register are authenticated by a director or the

secretary of the company or any other person authorised by the
Board for the purpose.
5 The register is maintained at the registered office of the company

and is preserved permanently

Date: Date:

87
Checklist: Register of Members (Section 88)
1 The company having share capital has maintained register of

members as per Form No. MGT.1 prescribed under Companies
(Management and Administration) Rules, 2014.
2 The Register contains particulars as mentioned in the aforesaid

rules.
3 The company maintains register of debenture holders or any

other security holders as per Form No.MGT.2 prescribed under
Companies (Management and Administration) Rules, 2014.
4 Aforesaid Registers are maintained at the Registered office of the

Company.
5 If the aforesaid registers are maintained at some other place in

which more than one-tenth of the total members entered in the
register of members reside or some other place within the city,
town or village where registered office is situated, whether a
special resolution has been passed.
6 An index of members is maintained by the company, when the
number of member is equal to or more than fifty.
7 Every change is incorporated within seven days of such change.
8 The entries in the aforesaid registers index included therein are
authenticated by the company secretary of the company or by
any other person authorised by the Board for the purpose, and
the date of the board resolution authorising the same is
mentioned therein.
9 The company has made a note of the declaration received in form
MGT. 4 in duplicate, w.r.t. beneficial interest in any shares, in the
register of members.
10 The company has filed form No. MGT.6 with the Registrar within
a period of thirty days from the date of receipt of aforesaid
declaration.
In case of Foreign Registers, check whether:
11 The Articles of the company authorises maintenance of the
foreign register.
12 The company has within thirty days from the date of the opening
of any foreign register, filed with the Registrar notice of the
situation of the office where such register is kept in Form
No.MGT.3 in accordance with the Companies (Management and
Administration) Rules, 2014.
13 Notice of every change is incorporated in the aforesaid register or

its discontinuance is filed with registrar within thirty days in
Form No. MGT. 3.
14 The company maintains a duplicate register at its registered
office and changes are duly incorporated from time to time.
15 The entries are authenticated by the company secretary of the
company or person authorised by the Board by appending his
signature to each entry.

Date: Date:
Checklist : Minutes Book of Meetings (Section 118 and Rule 25 of the Companies
(Management and Administration) Rules, 2014)
1 Minutes book has been maintained in respect of:

1. General meetings of the members;
2. Meetings of the creditors.
3. Meetings of the Board; and
4. Meetings of each of the committees of the Board.
Resolutions passed by postal ballot are recorded in the minute
book of general meetings.
2 The pages of the minutes book have been consecutively
numbered.
3 Each page of minutes of proceedings of a meeting of the Board or
of a committee thereof is initialled or signed and the last page of
the record of proceedings of each meeting is dated and signed by
the chairman of the said meeting or the chairman of the next
succeeding meeting.
4 Each page of minutes of proceedings of a general meeting is
initialled or signed and the last page of the record of proceedings
of each meeting is dated and signed by the chairman of the same
meeting within the aforesaid period of thirty days.
5 Each page of the minute books of general meeting in respect of

every resolution passed by postal ballot is initialed or signed and
the last page dated and signed by the Chairman of the Board
within thirty days or in the event of there being no Chairman of
the Board or the death or inability of that Chairman within that
period, by a director duly authorized by the Board for the
purpose.
6 The minute books of general meetings, and the minutes books of

the Board and committee meetings are maintained in the custody
of the company secretary or any director duly authorised by the
board.
7 In case of a company other than a company referred to in Chapter

XB or Chapter XC of the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009
having its equity shares listed on a recognised stock exchange or
a company having not less than one thousand members, whether
the company has provided e-voting facilities to its members to
exercise their vote at general meetings and if so, whether Rule 20
of the Companies (Management and Administration) Rules, 2014
has been complied with.

Date: Date:
Checklist: Register of Directors and Key Managerial Personnel and their Shareholding
(Section 170 read with Rule 17 of Companies (Appointment and Qualification of Directors)
Rules, 2014.)
1 The necessary particulars as prescribed in the rule 17 are

incorporated in the register including details of securities held by
each of them in the company or its holding, subsidiary, subsidiary
of company’s holding company or associate companies.
2 The register is maintained at the registered office of the company.

Date: Date:
Checklist : Register of loans guarantee, security and acquisition made by company (Section
186).
1 The company from the date of its incorporation, has maintained a

register in Form MBP 2 as per Companies (Meetings of Board and
its Powers) Rules, 2014 and enter therein separately, the
particulars of loans and guarantees given, securities provided and
acquisitions of securities.
2 The entries in the register are made chronologically in respect of
each such transaction within seven days of making such loan or
giving guarantee or providing security or making acquisition. The
entries in the register (either manual or electronic) are

authenticated by the company secretary of the company or by any
other person authorised by the Board for the purpose.
3 The register is kept at the registered office of the company.
4 The register has been preserved since incorporation and is kept

in the custody of the company secretary of the company or any
other person authorised by the Board for the purpose.

Date: Date:
Checklist: Register of Investments not held in its own name (Section 187)
1 A register of investments not held in the name of the company is

maintained as per Form No. MBP 3, in accordance with
Companies (Meetings of Board and its Powers) Rules, 2014.
2 The entries in the register are made chronologically, the

particulars of investments in shares or other securities
beneficially held by the company but which are not held in its
own name are to be entered.
3 The company has also recorded the reasons for not holding the
investments in its own name and the relationship or contract
under which the investment is held in the name of any other
person.
4 The company has also recorded when such investments are held
in a third party’s name for the time being or otherwise.
5 The register is maintained at the registered office of the company

and is preserved permanently.
6 The custody of the register is with the company secretary of the

company or if there is no company secretary, any director or any
other officer authorised by the Board for the purpose.
7 The entries in the register are authenticated by the company

secretary of the company or by any other person authorised by

Date: Date:

Checklist: Register of contracts with related party and contracts and Bodies etc. in which
directors are interested (Section 189)
1 The company has maintained one or more registers in Form MBP

4 as prescribed under Companies (Meetings of Board and its
Powers) Rules, 2014.
2 The entries are made at once, in chronological order.
3 The entries in the register(s) are authenticated by the company
secretary of the company or by any other person authorised by
4 The register(s) is kept at the registered office of the company and
is preserved permanently and is in the custody of the company
secretary of the company or any other person authorised by the
Board for the purpose.
5 The register(s) is placed before the next meeting of the Board and
signed by all the directors present at the meeting.
Date: Date:
Checklist: Register of Directors’ Attendance (Table F of Schedule I)

1 The company has maintained a Register of Directors’ Attendance
kept for that purpose.
2 Every director present at any meeting of the Board or of a
Committee thereof has signed against his name.
3 The requirements as specified in the Secretarial Standards have
been complied with.

Date: Date:
Checklist : Other Registers. These registers are not statutory but statistical in nature and PCS
is advised to comment about the maintenance of these registers though he need not qualify
his report in case of non-compliance.
Register of Shareholders’ Attendance
1 The company has maintained a register of shareholders’

attendance at the general meetings or has kept the attendance
slips collected from the members at the meeting.

Register of Proxies
2 The register of proxies containing details of proxies lodged in

respect of every general meeting is maintained.
3 All Proxies received by the company are recorded

chronologically in a register kept for that purpose, in pursuance
with the Secretarial Standards,
4 In case any Proxy entered in the register is rejected, the reasons

there of have been entered in the remarks column.
Register of Transfers
5 Register of Transfers containing details of transfer of securities

and the procedure of transfer meets the statutory requirements
pursuant to section 56 read with rule 11 of Companies(Share
Capital and Debentures) Rules,2014.
6 All transfer of securities held in physical form are in

Form.No.SH.4
Register of Documents Sealed
7 The company has maintained a register of documents on which

common seal is affixed.
8 The register contains the following:

• Number and date of the minutes authorising the use of
the seal.
• Date of sealing.
• Persons in whose presence the seal was affixed.
• Document sealed.
• Location of document.
Date: Date:
Checklist: Periodical Returns: Annual Return (section 92)
1 The company has filed annual return within sixty days from the
date of holding of the annual general meeting (AGM).
2 Where no AGM is held in any year, the annual return has been
filed within sixty days from the date on which the annual general
meeting should have been held together with the statement
specifying the reasons for not holding the annual general meeting,
if the annual general meeting.

3 The annual return is prepared in Form No. MGT.7 referred to in
Rule 11 of the Companies (Management and Administration)
Rules, 2014.
4 The annual return has been signed by a director and the company
secretary.
5 In case company does not have a company secretary, the annual

return has been signed by a director and Company Secretary in
practice.
6 In case of a listed company or a company having paid-up share

capital of ten crore rupees or more or turnover of fifty crore
rupees or more, the annual return has been certified by a
Company Secretary in practice and the certificate is in Form No.
MGT.8 of aforesaid rules.
7 The extract of the annual return has been attached to the Board’s
report in Form MGT. 9 (See Rule 12.1).

Date: Date:
Checklist : Annual Report containing the Financial statements (Section 137)
1 The company has filed financial statements duly adopted at the

annual general meeting of the company, within thirty days of the
date of annual general meeting.
2 The company has filed the financial statements with the Registrar
together with Form AOC-4 as per Rule 12(1) of the Companies
(Accounts) Rules, 2014.
3 Whether the company falls in the class of companies notified by

the Central Government from time to time to mandatorily file
their financial statement in Extensible Business Reporting
Language (XBRL) format, and if yes, whether it has been filed in
such manner.
4 Financial statements even if not adopted by members have been

filed within the 30 days from the date of AGM.
5 After the holding of adjourned AGM, adopted financial statements

are filed within 30 days of the date of adjourned AGM.
6 Where AGM for any year has not been held, the financial
statements duly signed along with the statement of facts and

reasons for not holding the AGM, have been filed with the
Registrar within thirty days of the last date before which the AGM
should have been held.

Date: Date:
Checklist : Secretarial Audit Report (section 204)
1 The Secretarial Audit Report in Form No. MR.3. pursuant to

section 204 read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is annexed
to the Board’s report forming part of the financial statements.

Date: Date:
Checklist : Report on Annual General Meeting (section 121)
1 In case of a listed company, it has filed with the Registrar in Form

No. MGT.15 of the Companies (Management and Administration)
Rules, 2014 the report on the AGM, within thirty days of the
conclusion of the annual general meeting.
2 The report is duly signed and dated by the Chairman of the

meeting or in case of his inability to sign, by any two directors of
the company, one of whom shall be the Managing director, if
there is one and company secretary of the company.

Date: Date:
Checklist : Other Important Returns
Return of Allotment (Section 39)
1 In case company makes any allotment of its securities, it has,

within thirty days thereafter, filed with the Registrar a return of
allotment in Form PAS-3 as per Companies (Prospectus and
Allotment of Securities) Rules, 2014.
2 A certified list of allottees stating their names, address,
occupation, if any, and number of securities allotted to each of the

allottees was attached with PAS-3. Certification has been done
by the signatory of the Form No. PAS-3.
3 If the company has allotted securities as fully or partly paid up
for consideration other than cash, , whether a copy of the
contract, duly stamped, or where the contract is not in writing
complete particulars of the contract stamped is attached to the
Form PAS-3. In such a case, whether a report of a registered
valuer in respect of valuation of the consideration was also
attached to PAS-3.
4 In the case of issue of bonus shares, a copy of the resolution
passed in the general meeting authorizing the issue of such
shares was attached to the Form PAS-3.
Return on Buy-Back of Securities (section 68)
1 The buy back of securities has been in accordance with section 68
read with rule 17 of the Companies (Share Capital and
2 The buy-back of securities has been authorized by a special
resolution passed in general meeting.
3 The company has filed the Letter of Offer in Form No.SH-8 in
accordance with the Companies (Share Capital and Debentures),
Rules, 2014, with the Registrar.
4 The company has filed the Declaration of Solvency in Form No.
SH-9 in accordance with the Companies (Share Capital and
Debentures), Rules, 2014 with the Registrar along with the Letter
of Offer. In case of Listed company, the Letter of Offer has also to
be filed with SEBI.
5 The Declaration of Solvency is signed by two directors, one of
whom shall be Managing Director, where there is one and is
verified by an affidavit.
6 The Letter of Offer is dispatched to the security holders not later
than twenty days from its date of filing with the Registrar. For
this purpose, the proof of dispatch may be verified.
7 The company has maintained a Register of Securities bought back
in Form No. SH-10 and the entries therein have been
authenticated by the Company Secretary or by any other person
authorized by the Board.
8 The company has, after the completion of the buy-back, filed with
the Registrar and where it is a listed company, with SEBI, a return
on buy-back in Form No. SH-11 as per the Companies(Share
Capital and Debentures) Rules, 2014 within 30 days of such
completion.
9 A certificate in Form No. SH.15 signed by two directors of the

company including the managing director, if any, certifying that
the buy-back of securities has been made in compliance with the
provisions of the Act and the rules made thereunder was attached
with the return.

Date: Date:
Checklist : Notice for alteration of share capital (section 64)
1 Articles of Association contains the power to alter share capital.

2 Company has filed a notice with the registrar within a period of
thirty days of such alteration along with altered memorandum.
3 The notice is in Form No. SH.7 of the Companies (Share Capital
4 The effect if alteration is noted in every copy of the
Memeorandum and Articles of Association of the company.
Date: Date:
Checklist : Return of changes in shareholding position of Promoters and top 10
shareholders{Section 93 read with Rule 13 of the Companies(Management and
Administration) Rules, 2014}
1 In the case of a Listed Company, the company has filed Form No.
MGT.10 with the Registrar with fee with respect to changes
relating to either increase or decrease of two percent, or more in
the shareholding position of promoters and top ten shareholders
of the company in each case, within fifteen days of such change.

Date: Date:
Checklist : Registration of Resolutions and Agreements (section 117)
Following resolutions are required to be filed with ROC:
a) special resolution
The following matters require sanction by special resolution
Section no. Section Name Particulars
5(4) Articles Inclusion of Entrenchment provisions in the articles of association of

a public company

12(5) Registered Change of the registered office outside the local limits of any city,
office of the town or village where such office is situated.
Company
13(1) & (8) Alteration of Alteration of the memorandum of the company to change the objects
and for which the money has been raised from public through
memorandum prospectus and still has any unutilized amount out of the money so
raised.
14 Alteration of Alteration of any clause of the articles.

articles
27 (1) Variation in Variation in terms of contract referred to in the prospectus or

terms of objects for which prospectus was issued.
contract or
the objects in
prospectus
41 Global Issuance of depository receipts in any foreign country

depository
receipt
48(1) Variation of Variation of the rights attached to the shares of any class
shareholders
rights
54 Issuance of Issuance of sweat equity shares of a class of shares already issued

sweat equity
shares
62(l) (b)/ Further issue — Issue of further shares to employees under a scheme of
(1)(c)/ (3), of share employees' stock option.
proviso capital
— Issue of further shares to any person whether or not
those persons include the existing members or employees
for cash or for a consideration other than cash, if the price
of such shares is determined by the valuation report of a
registered valuer.
— For approving the terms of issue of debentures or loan
containing an option to convert such debentures or loans
into shares.
66 Reduction of Reduction of share capital subject to the confirmation of the

share capital Tribunal
67(3)(b) Restriction on Approving any scheme for the purchase of, or subscription for, fully
purchase by paid up shares in the company or its holding company, if the
company or purchase of, or the subscription for, the shares held by trustees for

giving of loans the benefit of the employees or such shares held by the employee of
by it for the company.
purchase of its
shares
68 Power of Buy back of securities

company to
purchase its
own securities
71 Debentures Issue of debentures with an option to convert whole or part of the

debentures into shares at the time of redemption.
94 Place of To keep registers, returns etc., at any other place than the
keeping and registered office, where more than one-tenth of the total number of
inspection of members reside
registers,
returns, etc.
140 Removal, of Removal of the auditor before the expiry of his term after obtaining
auditors the previous approval of the Central Government
149(1), Company to — Appointment of more than fifteen directors by a

proviso/ have Board of company
(10) directors
— Re-appointment of an independent director after expiry of a
term of five consecutive years.
165(2) Number of Specifying number of companies (10/20) in which director of the

directorships company may act as director.
180 Restrictions Certain powers to be exercised by the Board of directors only with
on powers of the consent of company.
Board
185 Loan to Approving a scheme pursuant to which any loan may be given to a
directors, etc. managing or whole - time director.
186 Loan and Giving of any loan or guarantee or providing any security or the
investment by acquisition exceeds the limits of sixty per cent. of its paid-up share
company capital, free reserves and securities premium account or one
hundred per cent. of its free reserves and securities premium
account, whichever is more.
188 Related party Entering into contract or arrangement with a related party, in the
transaction case of a company having a paid-up share capital of not less than
such amount, or transactions not exceeding such sums, as may be
prescribed
196 Appointment Appointing the person as a managing director, whole-time director
of managing or manager who has attained the age of 70 years.

director,
whole time
director or
manager
197(4) Overall If Articles so provide determining the remuneration payable

maximum to the directors of a company, including any managing or whole-
managerial time director or manager
remuneration
and
managerial
remuneration
in case of
inadequacy or
absence of
profits.
210 Investigation For applying to Central Govt for investigation of the affairs of the
into affairs of company.
company
212 Investigation For applying to Serious Fraud Investigation Office for

into affairs of investigating the affairs of the company.
company by
Serious Fraud
Investigation
Office
248 Power of Filing an application before the Registrar to remove the name of
Registrar to company from the register of companies.
remove name
of company
from register
of companies
262 Sanction of Approving the Scheme of amalgamation of the sick company with
scheme any other company by the shareholders of both companies.
271 Circumstances To resolve that the company be wound up by the Tribunal.

in which
company may
be wound up
by Tribunal
304 Circumstances To resolve that the company be wound up voluntarily

in which
company may
be wound up
voluntarily

319(1) Power of Authorising Company liquidator of the transferor company to
company accept shares etc., by way of compensation wholly or in part for
liquidator to sale of property, etc., of the company where the transferor
accept shares, company is proposed to be wound up voluntarily
etc., as
consideration
for sale of
property of
company.
321 Arrangement To sanction any arrangement entered into between the company
when binding which is about to be, or is in the course of being wound up and its
on company creditors.
343 Company To authorise Company Liquidator to exercise certain powers

liquidator to
exercise
certain
powers
subject to
sanction
347 Disposal of Directing the manner of disposing of company's books and
books and papers when the affairs of a company have been completely wound
papers of up and it is about to be dissolved.
company
371 Effect of To adopt table F in schedule I, if required
registration
under this
Part
b) Resolutions which have been agreed by all the members but which, if not so agreed to, would
not have been effective unless passed as special resolutions
c) Board Resolution/agreement relating to appointment, re-appointment or renewal of the
appointment, or variation in the terms of appointment of managing director
d) Resolution passed by class of members
e) Members’ resolutions authorising the board to excercise powers under section 180(1)(a) &(c)
f) Resolutions for winding up under section 304
g) Board resolutions for exercising following powers:
i. Make call
ii. Buy back of securities
iii. Issuing securities
iv. Borrowing monies
v. Investing funds
vi. Granting loans/ giving guarantees/providing securities

vii. Approving financial statement and Board’s report
viii. Diversifying business
ix. Approving amalgamation/merger/ reconstruction
x. Taking over of a company/acquiring control in substantial stake in another company (I-X)
above as per section 179(3)
xi. Making political contributions
xii. Appointing or removing KMP
xiii. Appointing internal auditor
xiv. Appointing secretarial auditor
Serial No. (xi-xiv) above as per Companies (Meetings of Board and its Powers) Rules, 2014
1 A copy of every resolution as above or any agreement, together

with the explanatory statement under section 102, if any, is filed
with the Registrar within thirty days of the passing or making
thereof in Form No. MGT.14 as per Companies (Management and
Administration) Rules, 2014, along with the fee.
2 The copy of every resolution which has the effect of altering the
articles and the copy of every agreement has been embodied in or
annexed to every copy of the articles issued after passing of the
resolution or making of the agreement.(Sec 117(1) proviso).

Date: Date:
Checklist : Return of Appointment of Managerial Personnel (section 196)
1 The Board has passed a resolution for the appointment of

Managerial Personnel, viz. managing director, whole-time
director or manager, subject to approval by members at the next
general meeting.
2 The notice convening the board/general meeting for considering
the appointment includes the terms and conditions of such
appointment and remuneration payable and other matters,
including interest of director(s) in such appointments, if any.
3 A return of appointment of a Managing Director, Whole Time
Director or Manager, Chief Executive Officer (CEO), Company
Secretary and Chief Financial Officer (CFO) has been filed within
sixty days of the appointment, with the Registrar in Form No.
MR.1 as per Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014 along with such fee as may be
specified for this purpose.
The provisions of Section 203 of the Act relating to the
appointment of Key Managerial Personnel and the Rules
thereunder have been complied with i.e.
a) Company was required to have whole time KMP and as
such has appointed KMP.
b) Chairperson of the company is not the Managing director

or CEO of the company.
c) Chairperson of the company is the Managing director or

CEO of the company, but has been authorised by the
articles.
d) Chairperson of the company is the Managing director or

CEO of the company, since company has multiple
business.
e) Board Resolution was passed for appointment of

company containing terms and conditions of appointment
and remuneration.
f) None of the KMPs hold such office in more than one

company.
g) KMPs hold a similar position in another company, which

is a subsidiary company.
h) None of the KMPs is a director in any other company.
i) KMPs are directors in other companies with the

permission of the Board.
j) KMPs holding such position as on 1st April 2014 in more

than one company have chosen to be KMP of only one
company within a period of six months.
k) A person is appointed as managing director/ manager in

two companies with the unanimous approval of the board
for which specific notice was given.
l) Vacancy created in the position of KMP was filled within

six months.

Date: Date:

Checklist : Particulars of Appointment of Directors and key managerial personnel (section
170)
In case of appointment:
1 The person to be appointed as director has given his consent to

act as director to the company in Form No. DIR-2.
2 The company has filed Form No. DIR-12 as per Companies

(Appointment and Qualification of Directors) Rules, 2014 along
with such consent in DIR-2 with the Registrar within thirty days
of such appointment.
3 Check whether the date of obtaining DIN precedes the date of

appointment as director.
In case of change
4 The company has received the notice of resignation from the

director in writing.
5 The company has filed Form No. DIR-12 as per Companies

(Appointment and Qualification of Directors) Rules, 2014 along
with notice of resignation within thirty days of such change.

Date: Date:
Checklist : Return of Deposits (Chapter V)
Return of Deposits
1. Every company referred to in sub-section(2) of section 73 and

every eligible company intending to accept deposits has issued a
circular or a circular in the form of advertisement respectively in
Form DPT-1 and has complied with the requirements of Rule No.
4 of Companies (Acceptance of Deposits) Rules, 2014.
2. Whether the provisions relating to Deposit Insurance have been
complied with; (Rule 5)
3. Whether the company has created security for repayment of
deposit and interest; (Rule 6)
4. Whether the company has appointed Trustees for secured
deposit in the manner and Deposit Trust Deed has been executed;
(Rule 7)

5. Whether the company has maintained liquid assets and created a
Deposit Repayment Reserve Account; (Rule 13);
6. The company has, on or before the 30th day of June, of every

year, filed with the Registrar, a return in Form DPT-3. (Rule 16)
7. Check whether the Form DPT-3 contains the information therein

as on the 31st day of March of that year duly audited by the
auditor of the company.
8. Whether Register of Deposits has been maintained; (Rule 14)

Date: Date:
Checklist : Particulars of Beneficial Interest in Shares (section 89)
1. The company has received the declaration from the

member/beneficial owner in the prescribed form MGT-4/MGT-5.
2. Such declaration is noted in the register of members.
3. The company has filed within 30 days of the receipt of the

declaration, a return in Form No.MGT.6 as per Companies
(Management and Administration) Rules, 2014 with the Registrar
in respect of such declaration with fee.

Date: Date:
Checklist: Registration of Creation/Modification/Satisfaction of Charge (Chapter VI)
1. The company has created or modified charge on its property. And

the particulars of the charge created or modified are filed with
the Registrar within thirty days of its creation or modification in
Form No.CHG-1 (for other than Debentures) or Form No.CHG-9
(for debentures including rectification).
2. A copy of every instrument evidencing any creation or

modification of charge, filed with the Registrar is verified as
follows-

(a) Where the instrument or deed relates solely to the
property situated outside India, the copy is verified by a
certificate issued either under the seal of the company, or
under the hand of any director or company secretary of
the company or an authorised officer of the charge holder
or under the hand of some person other than the
company who is interested in the mortgage or charge;
(b) Where the instrument or deed relates, whether wholly or
partly, to the property situated in India, the copy is
verified by a certificate issued under the hand of any
director or company secretary of the company or an
authorised officer of the charge holder.
3. The company has given intimation to the Registrar of the

payment or satisfaction in full of any charge within a period of
thirty days from the date of such payment or satisfaction in Form
No.CHG-4 along with the fee.
4. In case the particulars of creation or modification of charge has

not been filed within 300 days of the date of creation or
modification with additional fees or the particulars of satisfaction
of charge are not filed within 30 days from the date of
satisfaction, the delay has been condoned by Central Government.
[Rule 12 of the Companies (Registration of Charges) Rules, 2014].

Date: Date:
***

2
3
CAPITAL MARKET RELATED
LAWS/RULES/REGULATIONS
A. SECURITIES CONTRACTS (REGULATION) ACT, 1956 AND RULES MADE THEREUNDER
The Securities Contracts (Regulation) Act, 1956 (SCRA) defines various terms in relation to
securities and provides the procedure for the stock exchanges to get recognition from Government/
SEBI, procedure for listing of securities of companies and operations of the brokers in relation to
purchase and sale of securities on behalf of investors. The Central Government promulgated the
Securities Contracts (Regulation) Rules, 1957 (SCRR) for carrying into effect the object of the SCRA,
1956. A company listed on a stock exchange is required to comply with the provisions of SCRA and
SCRR.
Check list for Compliances under Securities Contracts (Regulation) Act, 1956 and the Rules
made thereunder :
Sl. No. Particulars Compliance Remarks
1. Check whether the company has issued securities to the

public.
2. If yes, whether, an application for listing to the stock

exchange has been made by the company along with the
documents and particulars mentioned in Rule 19(1) of
the Securities Contracts (Regulation) Rules, 1957.
(Section 17A)
3. Whether the conditions of listing agreement have been

complied with, on receipt of approval for listing of
securities? (Section 21)
4. Whether the application for listing of securities has

been refused by the stock exchange. Section 17A(3)
5. If the permission is refused, whether the company has

repaid all moneys, if any, received from applicants in
pursuance of the offer document? [Section 17A (3)]
6. In case the stock exchange refused to list the securities,

whether the company has made an appeal to the Central
Government or the Securities Appellate Tribunal, as the
case may be, against such refusal. (Section 22 & 22A)

7. What was the outcome of the appeal?
8. If listed, the company has complied with Rule 19A of

SCRR with respect to continuous listing requirement
with the stock exchange.
Note: To check this, PCS may check the annual report of
the company and the shareholding pattern filed by the
company with the stock exchange under clause 35 of
listing agreement.
9. The company has complied with-

(i) Rule 19 (1) of SCRR with respect to filing of
documents.
(ii) 19 (2) (b) of SCRR with respect to minimum
public shareholding.

Date: Date:

B. DEPOSITORIES ACT, 1996
Depository means an organisation where the securities of a shareholder are held in the form of
electronic accounts in the same way as a bank holds money. The Depository holds electronic
custody of securities and also arranges for transfer of ownership of securities on the settlement
dates.
According to section 2(e) of the Depositories Act, 1996, Depository means a company formed
and registered under the Companies Act and which has been granted a certificate of registration
under section 12(1A) of the Securities and Exchange Board of India Act, 1992. Chapter II of SEBI
(Issue of Capital and Disclosure Requirements) Regulations, 2009 states that no issuer shall make a
public issue or rights issue of specified securities unless it has entered into an agreement with a
depository for dematerialization of specified securities already issued or proposed to be issued.
Section 29 of the Companies Act, 2013 also mandates that every company making public offer
and such other class or classes of companies as may be prescribed, shall issue the securities only in
dematerialized form by complying with the provisions of the Depositories Act, 1996 and the
regulations made thereunder.
The section further provides that other companies may convert its securities into
dematerialized form or issue securities in physical or dematerialized form.
Rule 9 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 provides that the
promoters of every company making a public offer of any convertible securities may hold such
securities only in dematerialized form. Also the entire holding of convertible securities of the
company by the promoters held in physical form up to the date of the initial public offer shall be
converted into dematerialized form before such offer is made and thereafter such promoter
shareholding shall be held in dematerialized form only.
Checklist for compliances under Depositories Act, 1996
1. Check the Tripartite agreements entered into by the

company with the depository for dematerialisation of
securities. (NSDL/CDSL)
2. Check that the provisions of section 29 of the

Companies Act, 2013 and the rules made thereunder
have been complied with.
3. Check that the company has complied with clause

55A of SEBI (Depositories and Participants)
Regulations, 1996 with respect to the reconciliation of
share capital audit.
Note : PCS may check the certified copy of quarterly
audit report submitted to the stock exchange by the
company with respect to reconciliation.

Date: Date:

C. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
Takeover of companies whose securities are listed on one or more recognized stock exchanges
in India is regulated by the provisions of the Listing Agreements with various stock exchanges and
the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011. The compliances under the regulations include event based/continual
disclosures, open offer requirements including public announcement, escrow account, obligations
of acquirer/target company/merchant banker, undertaking/authorization, offer price etc.
Checklist for Compliances under SEBI (Substantial Acquisition of shares and Takeovers)
Regulations, 2011
Sl. no. Particulars Compliance Remarks
1 The Company has appointed merchant banker

registered with SEBI.
2 The acquirer has made a public announcement

with respect to substantial acquisition of shares
or voting rights and acquisition of control in the
target company. (Note: The PCS may check from
the documents of the target company for
ensuring compliance with the same)
3 The acquirer has published detailed public

statement not later than five workings days of
the public announcement.
(Note: The PCS may check the copies of
newspaper clipping for ensuring the compliance
of the same)
4 The acquirer through its manager to the open

offer has sent the public announcement to all the
stock exchanges where the shares of the target
company are listed.
5 The copy of the public announcement has also

been sent to SEBI and the target company at its
registered office within one working day of date
of the public announcement.
(Note: The PCS may check the copy of the
documents mentioned in point 4 and 5 available
by the merchant banker for verifying the same)
6 The acquirer has after publication of detailed

public statement in the newspaper, sent a copy of
the same to –
(i) the SEBI;

(ii) all the stock exchanges where the shares
of the target company are listed;
(iii) the target company at its registered office.
(Note : The PCS may check the document

provided by merchant banker for verifying the
same)
7 In case of upward revision in offer price, or of the
offer size, the acquirer has made announcement
about the same in all the newspaper as
prescriber under these regulations. (Note : The
PCS may check the copy of newspaper clipping
for verifying the same)
8 The acquirer has informed about such upward

revision to SEBI, all the stock exchanges on which
the shares of the target company are listed, and
the target company at its registered office.
9 The acquirer has disclosed during the offer

period every acquisition made by the acquirer or
persons acting in concert with him of any shares
of the target company to each of the stock
exchange on which the shares of the target
company are listed and to the target company at
its registered office within twenty- four hours of
such acquisition.
10 The acquirer has issued an advertisement

announcing the schedule of activities for the
open offer, the status of statutory and other
approvals, if any, Unfulfilled conditions , if any,
and their status , the procedures for tendering
acceptances and such other material detail as
may be specified, in all the newspapers as
prescribed in these regulations.
11 The acquirer has sent such advertisement to-
(i) SEBI;
(ii) all the stock exchanges on which the
shares of the target company are listed;
and
12 The acquirer has issued a post offer
advertisement within five working days after the
offer period giving details including aggregate

number of shares tendered, accepted, date of
payment of consideration.
13 The acquirer has sent such post offer

advertisement to-
(i) SEBI;
(ii) all the stock exchanges on which the shares
of the target company are listed; and
14 After payment of consideration to the

shareholders, the acquirer has transferred the
unclaimed balances, if any, lying at the credit of
the special escrow account, to the Investor
Protection and Education Fund established
under the SEBI (Investor Protection and
Education Fund) Regulations, 2009, at the end of
seven years from the date of deposit thereof.
15 In case of withdrawal of open offer, the acquirer
has made an announcement within two working
days in the same newspaper in which public
announcement to the open offer was published
providing the grounds and reasons for
withdrawal of open offer.
16 The acquirer has informed in writing with such
announcement to-
(i) SEBI;
17 In the event it was required to alienate any

material assets of the target company or any of
its subsidiaries, where the acquirer has not
expresses its intention to alienate in the detailed
public statement and the letter of offer, where it
has been debarred from causing such alienation
in a period of two years after the offer period
such alienation has been passed by special
resolution by way of postal ballot by the
shareholders of the target company.
(Note: The PCS may check Form No. MGT-14 for
verifying the special resolution passed for such
alienation)

18 The recommendation on open offer made by the
committee of independent directors of the target
company, has been published in the same
newspaper where the public announcement of
the open offer was published atleast two working
days before the commencement of the tendering
period.
19 The copy of such recommendations published,

has been sent to :-
(i) SEBI;
20 The manager to open offer has submitted the due

diligence certificate to SEBI. (Note: PCS may
check the copy of the due diligence certificate)
21 The manager to open offer has been filed with

SEBI a report confirming status of completion of
various open offer requirement.
(Note: PCS may check the copy of the report
submitted to SEBI)
22 In case of event based disclosures as prescribed

under regulation 29(1) and (2), such disclosures
have been made to the target company at its
registered office and to all the stock exchanges
where the shares of the target company are listed
within the two working days of the receipt of
intimation of allotment of shares, or the
acquisition of shares or voting rights in the target
company.
23 The continual disclosures as specified in

regulation 30(1) and (2), have been made within
seven working days from the end of each
financial year to every stock exchanges where
the shares of the target company are listed and to
the target company at its registered office.
24 The disclosure regarding shares encumbered by

promoter or by persons acting in concert with
him and also any invocation of such
encumbrance or release of such encumbrance
shares, have been made to all the stock

exchanges where the shares of the target
company are listed and to the target company at
its registered office within seven working days
from the creation or invocation or release of
encumbrance, as the case may be.
(Note: The pcs may check the copy of the formats
submitted to stock exchange and target company
for verifying point 22, 23 & 24)
25 The PCS may check the copy of the following

formats prescribed for various disclosures /
Reports for ensuring compliance of SEBI (SAST)
Regulations 2011.
(It may be noted that PCS may request the merchant banker to the open offer to provide all the
document for the purpose of verification. while conducting secretarial audit)

D. SEBI (Prohibition of Insider Trading) Regulations
Provisions of Companies Act 2013 on prohibition of insider trading.
Section 195. (1)states that no person including any director or key managerial personnel of a
company shall enter into insider trading: However, nothing contained in this sub-section shall
apply to any communication required in the ordinary course of business or profession or
employment or under any law.
Who is an insider?
Explanation.—For the purposes of this section,—
(a) “insider trading” means—
(i) an act of subscribing, buying, selling, dealing or agreeing to subscribe, buy, sell or
deal in any securities by any director or key managerial personnel or any other
officer of a company either as principal or agent if such director or key managerial
personnel or any other officer of the company is reasonably expected to have access
to any non-public price sensitive information in respect of securities of company; or
(ii) an act of counselling about procuring or communicating directly or indirectly any

non-public price-sensitive information to any person;
(b) “price-sensitive information” means any information which relates, directly or indirectly,
to a company and which if published is likely to materially affect the price of securities of
the company.
Further section 195 (2) states that if any person contravenes the provisions of this section, he
shall be punishable with imprisonment for a term which may extend to five years or with fine
which shall not be less than five lakh rupees but which may extend to twenty-five crore rupees
or three times the amount of profits made out of insider trading, whichever is higher, or with
both.
Powers delegated to SEBI under Companies Act 2013
Section 458.(1) states that the Central Government may, by notification, and subject to such
conditions, limitations and restrictions as may be specified therein, delegate any of its powers
or functions under this Act other than the power to make rules to such authority or officer as
may be specified in the notification:
The powers to enforce the provisions contained in section 194 and section 195 relating to
forward dealing and insider trading shall be delegated to Securities and Exchange Board for
listed companies or the companies which intend to get their securities listed and in such case,
any officer authorised by the Securities and Exchange Board shall have the power to file a
complaint in the court of competent jurisdiction.
SEBI (Prohibition of Insider Trading) Regulations
The Securities and Exchange Board of India (SEBI) formulated the SEBI (Insider Trading)
Regulations, 1992 under the powers conferred on it under the SEBI Act, 1992. The PIT
Regulations, 1992 had their challenges in their drafting, interpretation and reach. Besides, the

felt need to ensure a clear regulatory policy that is not only easily comprehendible but is also
comprehensive led to this Committee being set up under the chairmanship of Justice N. K. Sodhi,
Former Chief Justice of the High Courts of Kerala and Karnataka and a Former Presiding Officer
of the Securities Appellate Tribunal.
SEBI has issued and notified the SEBI (Prohibition of Insider Trading) Regulations, 2015
(Regulations) on 15th January, 2015 based on recommendations of sodhi committee. These
Regulations are effective from 120th day of the date of notification i.e. on and from 15th May,
2015
Accordingly, the Secretarial Auditor has to check compliances under SEBI (Prohibition of
Insider Trading) Regulations, 1992 till May 14, 2015 and with effect from May 15, 2015 the
compliances are to be checked as per SEBI (Prohibition of Insider Trading) Regulation, 2015.
Every listed company has to comply with the provisions of SEBI (Prohibition of Insider Trading)
Regulations, 1992 (PIT) Regulations/SEBI(Prohibition of Insider Trading) 2015 as the case may
be read with Section 195 of the Companies Act, 2013.
I. Checklist for compliances under SEBI (PIT) Regulations, 1992
1. Any action has been initiated by SEBI against the

company or any of its director, officer or employee
under PIT regulations.
2. The company or any of its director, officer or employee

has been convicted by SEBI with respect to Insider
Trading.
(Note: Please mention the action taken by SEBI in the
audit report as qualification)
3. The company has formulated a Code of Conduct for

Insider Trading as provided in the SEBI Regulations.
(Note: Please check the copy of the code of conduct)
4. The company has appointed a compliance officer.
5. The company maintains a record (list) of designated

officers and their dependents.
6. The record is maintained manually or in electronic

form.
7. The company has constituted a committee to oversee

and implement the Code of Conduct, the name of the
committee and its terms of reference.
8. The company is regular in receiving initial and

continual disclosures from the designated persons,
directors, officers, promoter or person forming part of

promoter group with respect to the total number of
shares or voting rights held and change in shareholding
or voting rights of shares held by such persons.
9. The company is regular in disclosing the information

received from its officer, director, promoter or person
forming part of promoter group to the stock exchange in
the format prescribed by SEBI.
10. The compliance officer maintains the record of the said
disclosures as required to be made by the aforesaid
persons.
11. The mode of maintaining the records of the said
disclosures, whether physical or electronic mode.
12. The company has framed the Code of corporate
disclosures practices.
(Note: Check the copy of code of corporate disclosures
practices as specified in Schedule II)
13. The compliance officer has framed procedures
for pre-intimation of closure of trading window and
opening of trading window on periodic rests.
14. The procedure of pre-clearance of trade is followed in
the company.
(Note: Check the method used for such pre-clearance of
trade followed by the company)
15. Any director/ officer/ designated employee have
entered into opposite transaction during the next six
months following the prior transaction relating to
buy/sell of company securities.
16. The company follows the Chinese Wall policy provided
under these regulations.
17. There has been any waiver of holding period, if so, how
many times and to whom?
18. The following statements have been forwarded

to the compliance officer by the directors/designated
employees/partners including the dependent family
members (as defined by the company/
organisation/firm) at the time of joining the
organisation and
I. periodic statement of any transactions in
securities;
II. the annual statement of all holding in securities.

19. The compliance officer makes presentation before the
Managing Director/Chief Executive Officer or the
Committee on a monthly basis of all the details of the
dealing in the securities by employees/director/officer
of the company and the accompanying documents that
such persons had executed under the pre-dealing
procedure as envisaged in this code.
20. An undertaking by designated employee director/

officer has been executed in favour of the company
incorporating, inter alia, the following clauses, as may
be applicable :
i. that the employee/director/officer does not

have any access or has not received “Price
Sensitive Information” upto the time of signing
the undertaking.
ii. that in case the employee/director/officer has

access to or receives “Price Sensitive
Information” after the signing of the
undertaking but before the execution of the
transaction, he/she shall inform the Compliance
Officer of the change in his position and that
he/she would completely refrain from dealing in
the securities of the company till the time such
information becomes public.
iii. that he/she has not contravened the code of

conduct for prevention of insider trading as
notified by the company from time to time.
iv. that he/she has made a full and true disclosure

in the matter.
21. Any action taken against any employee upon non-

adherence to the said code of conduct.
22. Any other prevention mode with respect to Insider

Trading as adopted by the Company.

Date: Date:

II. SEBI (Prohibition of Insider Trading) Regulations, 2015
Checklist for Compliances under SEBI (PIT) Regulations, 2015 (effective from May 15, 2015)
1. Any action has been initiated by SEBI against the

company or any of its promoter, director, Key
Managerial Personnel, officer or employee under the
PIT regulations in the past or present.
2. The company or any of its promoter, director, Key

Managerial Personnel, officer or employee has been
convicted by SEBI with respect to Insider Trading in the
past or present.
(Note: Please mention the action taken by SEBI in the
audit report as qualification)
3. The company has appointed a compliance officer.
4. The Board of Directors of every listed company has

formulated a code of practices and procedures for fair
disclosure of unpublished price sensitive information as
per Schedule A to these regulations.
Note : The PCS may check true copy of the code.
5. The Company has appointed a Chief Investor Relation

Officer, who is also a senior officer of the company to
deal with dissemination of information and disclosure
of unpublished price sensitive information, as per the
principles set out in Schedule A of these regulations
6. The Company has formulated code of conduct to

regulate, monitor and report trading by insiders as per
Schedule B of these regulations.
7. The Company has formulated an internal code of

conduct for governing dealing in securities as per the
minimum standards set out in Schedule B.
8. The Company has published the code of fair disclosure

on its website.
9. Every such code of practices and procedure relating to

unpublished price sensitive information and every
document thereto has been promptly intimated to the
stock exchange where the securities are listed.

10. Every other person who is required to handle Price
Sensitive Information in the course of business
operation has formulated a code of conduct as per the
minimum standards set out in Schedule B to these
regulations.
11. The Compliance Officer has administered the code of

conduct and other compliance requirement under these
regulations.
12. The Compliance officer has reviewed and monitored the

trading plans submitted by the insider and approved the
trading plan that it has not violated these regulations.
13. The Compliance officer has received undertaking or

declaration from insider with respect to the trading
plan, as the case may be.
14. The Compliance officer has notified the trading plan to

the stock exchange(s).
15. The Company maintains the record of the said
disclosures as required for a minimum period of five
years.
16. The Company is regular in receiving the initial
disclosure from every promoter, Key Managerial
Personnel (KMP) and Directors with respect to the
securities held by them in Company.
17. The Company has received initial disclosure within 30
days from the effective date of these regulations i.e. May
15, 2015.
18. The Company receives disclosure by every person on
appointment as KMP or Director or upon becoming a
promoter within seven days of such appointment or
becoming promoter.
19. The Company is regular in receiving continual
disclosure from the promoter(s), employees and
directors with respect to the number of securities
acquired or disposed of within two trading days of such
transaction.
20. The Company has notified the particulars of such
trading to the stock exchange(s) within two trading
days of receipt of the disclosure or from becoming
aware of such information.
21. The Company is regular in receiving disclosures of

holding & trading of securities of the company by any

other connected person or class of connected persons,
held or traded by them. The Company has in its
discretion require this information & set out the
frequency for seeking such information.
22. The Compliance officer has provided reports of trading

to the Chairman of Audit Committee, if any or to the
Chairman of the Board of Directors as per the frequency
stipulated by the Board of Directors.
23. The Company follows Chinese wall procedures &

processes as per the norms contained in the code of
conduct.
24. The Compliance officer determines the timing of trading

window and re-opening of the trading window.
25. The Compliance officer has put in place appropriate

procedure for pre-clearance of trade.
26. The Designated Person have not entered into any contra
trade as per the specified period as mentioned in the
code of conduct which shall be not less than six months
from the date of trade in securities of the Company.
27. The profit arises from the Contra trade, if executed

inadvertently or otherwise, has been liable to be
disgorged for remittance to SEBI for credit to the
Investor Protection and Education Fund administered
by the SEBI under the Act.
28. Any action taken against persons responsible for non

adherence with respect to formulation of code of
conduct.
29. Any other prevention mode with respect to insider

trading as adopted by the Company.
Checked by : Reviewed by:

Date: Date:

E. SEBI (ICDR) Regulations, 2009
Checklist
GENERAL COMPLIANCES
1. Details of issue may be checked in the offer document

filed with SEBI and simultaneous filing of prospectus/
red- herring prospectus or shelf prospectus.
[Note: The PCS may check the copy of the statement by
the lead Merchant Banker certifying that all changes,
suggestions and observations made by SEBI have been
incorporated and a copy of due diligence certificate in
Form A of schedule I of SEBI (ICDR) Regulations, 2009
ensuring compliance with the provisions of the
regulation]
2. Where warrants have been issued along with public

issue or rights issue, the tenure of such warrants has
not exceeded a period of twelve months from the date
of allotment in public/ rights issue.
3. The utilization of proceeds for General Corporate

Purposes have not exceeded twenty five percent of the
amount generated by the issuer.
4. All application moneys received has been refunded to

the applicants in case of non-receipt of minimum
subscription i.e. ninety percent of the offer within:
i. fifteen days of the closure of the issue, in case of
a non-underwritten issue; and
ii. seventy days of the closure of the issue, in the
case of an underwritten issue where minimum
subscription including devolvement obligations
paid by the underwriters is not received within
sixty days of the closure of the issue.
(Note: The PCS may check the refund orders /
certificate of posting for the compliance of the
provision)
5. Towards the utilization of proceeds, where the issue

size exceeds five hundred crore rupees, a monitoring
agency has been appointed to monitor the proceeds.
(Note: The PCS may check the copy of report of the
monitoring agency in schedule IX, which has to be filed

on a half yearly basis with SEBI, till the proceeds of the
issue are fully utilised.)
6. (Note: the PCS may check the documents from the

merchant banker w.r.t. its compliance)
7. The specified securities are to be allotted and/or

application moneys to be refunded within fifteen days
from the date of closure of the issue and where
securities are not allotted/ application moneys
refunded interest undertaken in the offer document has
to be paid, in case of delayed payments and the payment
has to be done by NEFT / RTGS.
(Note: The PCS may check the refund orders /
certificate of posting to ensure compliance of the same.)
8. The pre-issue advertisement is required to be made

after registering the red herring prospectus (in case of
book built issue) or prospectus (in case of fixed price
issue) with Registrar of companies in specified
newspapers in format specified in Part A of schedule
XIII.
(Note: The PCS may check the copies of the newspaper
clippings for compliance of the same.)
9. The issuer is required to make an announcement of the

floor price or price band alongwith financial ratios
computed for both the upper and lower end of the price
band at least 5 working days before the opening bid( in
case of IPO) and at least one working day before the
opening of the bid(in case of FPO) in all newspapers in
which pre-issue advertisement was made. The
announcement shall also be sent to the stock exchanges
where the securities are proposed to be listed for
disclosure on their website.
10. Receipt of minimum promoters’ contribution and

allotment of their securities are in accordance the
requirements.
(Note: the PCS may verify from the copy of the
resolution passed by the board of directors of the issuer
for allotting specified securities to promoters towards
amount received against promoters’ contribution,
before opening of the issue; and a certificate from a

Chartered Accountant, before opening of the issue,
certifying that promoters’ contribution has been
received in accordance with these regulations, which
shall also contain the names and addresses of the
promoters who have contributed to the promoters’
contribution and the amount paid by each of them
towards such contribution)
11. An issuer making a public issue of specified securities

providing for green shoe option for stabilising the post
listing price of its specified securities, may do so only
after shareholder approval.
(Note: The PCS may check copy of resolution passed in
the general meeting of shareholders and the agreement
in between the issuer and the stabilizing agent.)
12. A report on activities under green shoe option

stabilizing agent are required to be reported to SEBI on
daily basis and during the stabilisation period and a
final report to the Board in the format specified in
Schedule XII.
(Note: the PCS may verify the copies of such report for
compliance.)
13. Whether the application money received has been

utilized in accordance with the section 40 of Companies
Act, 2013.
14. Whether the disclosures made in the red herring

prospectus while making an initial public offer are
updated on an annual basis by the issuer and shall be
made publicly accessible.
15. Check whether the outstanding subscription money is

called within twelve months from the date of allotment
in the issue and where the applicant has failed to pay
the call money within the twelve months, such shares
has been forfeited.
16. Whether the issuer has altered the terms (including the
terms of issue) of specified securities which and the
same may adversely affect the interests of the holders of
that specified securities, if so, the consent in writing of
the holders of not less than three-fourths of the
specified securities of that class or with the sanction of a
special resolution passed at a meeting of the holders of
the specified securities of that class has been obtained.
This is only for holders of Convertible portion of the

PCDs. Hence applicable only if an issue of such an
instrument has been made.
(Note: The true copy of the resolution may be checked
for compliance of the same.)
17. The issuer is required to appoint a compliance officer

for monitoring the compliance of securities laws and for
redressal of investor grievances.
18. The lead merchant banker is required to submit post

issue reports to SEBI.
19. The lead merchant banker is required to submit a due

diligence certificate as per the format specified in Form
G of Schedule Vi, along with the final post issue report.
(Note: the PCs may check the copy of the due diligence
certificate submitted and reports filed by the lead
merchant banker with the SEBI.
20. The post issue advertisement is issued within ten days

from the date of completion of the various activities in
specified newspapers containing all the details as
specified.)
(Note: The PCS may check the copies of newspaper
Additional requirements for Issue of Convertible Debt instruments
21. The issue of debentures with an option to convert such

debentures into shares, wholly or partly, shall be
approved by a special resolution passed at a general
meeting.
(Note: The PCS may check the e-form MGT. 14 filed with
ROC for the details of the issue)
22. The issuer has created Debenture Redemption Reserve
in accordance with section 71 of Companies Act, 2013
23. In case of secured debentures, the issuer has created
charge on the security.
(Note: The PCS may check the e-form CHG.9 for
verifying the same.)
24. Where the value of non-convertible portion of partly
convertible debt instruments exceeds fifty lakhs the
same may be rolled over only when 75% of holders of
convertible debentures have approved the rollover
through a resolution by postal ballot

(Note: The PCS may check MGT. 14 for the compliance
of the same.)
RIGHTS ISSUE
25. Certified true copy of the resolution passed by the

Board of Directors for issue of securities under
proposed rights issue/ approving the proposed rights
issue.
26. To check if the stock exchange has been informed 2

working day prior to the Board Meeting which proposes
to consider a rights issue.
27. Certified true copy of the resolution passed by the

Shareholders, if any;
• increase in the authorised share capital
required)(special resolution).
 for issue of securities under proposed rights
issue
(Note: The PCS may check the copy of Form No. SH 7,
MGT14 filed with ROC)
28. A pre-issue advertisement for the rights issue has to be

made in accordance with the details specified in the
regulation, at least three days before the opening of the
issue in newspapers as specified.
clippings for the compliance of the same.)
(Note: The PCS may check the E-form MGT.14 filed with
ROC for verification.)
29. In case the company has issued convertible debt

instruments, it is to be ensured whether the issuer
company has made reservation of equity shares of the
same class in favour of the holders of such instruments
proportion to the convertible part thereof, before e
opening a rights issue of equity shares. Check whether
the equity shares so reserved were issued at the time of
conversion of convertible debt instruments on the same
terms at which equity shares offered in rights issues
were offered.
(Note: The true copy of the resolution may be checked
for compliance of the same and also the returns filed on
allotment of the same to the debenture holders.)
30. To check if 7 working days notice was given for Record

Date. To also check if all the directors at a duly
convened meeting had approved the Letter of Offer.
31. Check whether the issuer is in compliance with the

conditions for continuous listing of equity shares as
specified in the listing agreement with the recognised
stock exchange where the equity shares of the issuer
are listed.
32. To check whether the promoters have complied with

the SEBI (SAST) Regulations, in case of taking in
additional shares.
33. To check whether necessary disclosures have been

made by the promoters under the SEBI (SAST) and SEBI
(PIT) Regulations, with Stock Exchanges where the
shares are listed/SEBI post the rights issue.
BONUS ISSUE
34. Whether the issuer company is authorised by its articles

of association for issue of bonus shares; if not a special
resolution has been passed.
(Note: The PCS may check that certified true copy of the
Resolution passed in the EGM/AGM and Form MGT 14
has been filed with the Registrar.
35. In case the issuer company is authorised by its articles

check the certified true copy of the Resolution passed
by the Board of Directors in which the company has
proposed to issue Bonus Shares to the shareholders of
the company.
36. A certificate from the Managing director/ Company

Secretary ………….. that the proposed bonus shares
would be ranking pari-passu in all respects including
dividend with the existing equity shares of the company
should be checked.
( Note: This certificate is required as per BSE norms.
The certificate requirement is not prescribed under
SEBI (ICDR) Regulations, 2009 but there is a clause that
the The shares issued in the issue shall be pari passu
with the existing shares in all respects including
dividends.)
37. To confirm that all the existing securities of the

company were fully paid-up and listed on the
Exchange at the time of the bonus issue.

38. A certified true copy of the acknowledgement of FCGPR
form has been submitted by the company to Reserve
Bank of India in respect of allotment of bonus shares to
foreign entities/shareholders.
 Check whether an issuer, announcing a bonus
39. issue after the approval of its board of directors
and not requiring shareholders’ approval was
implemented within fifteen days from the date of
approval of the issue by its board of directors
• Check whether the bonus issue was implemented

within two months from the date of the meeting of
its board of directors wherein the decision to
announce the bonus issue was taken subject to
shareholders’ approval.
In case of unlisted company the issuer company shall
40. comply with section 63 of the Companies Act, 2013
which has been discussed earlier.
PREFERENTIAL ISSUE
41. The listed issuer may make a preferential issue only

when special resolution has been passed by the
shareholders of the company.
(Note: The PCS may check copy of e-form MGT 14 filed
with the ROC.)
42. Check whether the additional disclosures as specified in

the regulations were also made in the explanatory
statement of the notice for the general meeting
proposed for passing special resolution
43. To prepared a private placement offer letter in Form

No. PAS 4 in accordance with the Companies Act, 2013
and the same has been addressed to the proposed
investors / allottees.
44. To maintain a register of all the persons, to whom the

preferential offer is going to be made in accordance
with Form No. PAS 5 of the Companies Act, 2013.
45. Check whether the Allotment pursuant to the special

resolution in case of preferential issue has been
completed within a period of fifteen days from the date
of passing of such resolution or the receipt of approval
from the stock exchange, whichever is later.

46. Where allotment is :
I) for consideration other than cash check the
following documents
• Certified copy of valuation report
• Certified copy of Shareholders Agreements.
• Certified copy of approval letters from FIPB
and RBI if applicable.
II) pursuant to CDR Scheme/ Order of High Court/
BIFR check the following document
• Certified copy of relevant scheme/ order
III) pursuant to conversion of loan of financial
institutions check the following document:
• Certified copy of the Loan Agreement
executed by the company.
Check if the consideration is paid in cash, it was
received from the respective allottee’s bank account.
47. To check if the allottees have made necessary

disclosures under Regulation 29(1)/29(2) of the SEBI
(SAST) Regulations, 2011 and Regulation
13(3)/(4)/(4A) of the SEBI (PIT) Regulations, 1992 and
Regulation 7 of the SEBI (PIT) Regulations, 2015 within
the stipulated time to the stock exchanges.
(Note: SEBI (PIT) Regulations, 2015 will be effective
from May 15, 2015.)
48. The Issuer company has complied with Clause 35 of the

equity Listing Agreement w.r.t pledging of shares.
49. To check if the number of allottees pursuant to one

resolution does not exceed 50 and that the total number
of allottees in preferential allotments in a financial year
do not exceed 200.
50. Check the copy of the confirmation submitted by the

Managing Director/ Company Secretary of the issuer
company w.r.t. compliance with the regulations.
QUALIFIED INSTITUTIONAL PLACEMENT
51. Check the copy of special resolution approving the

qualified institutional placement passed by its
shareholders and Form MGT 14 filed with ROC. To

check if the resolution specifically mentions that the
allotment is Qualified Institutional Placement.
52. Check that the minimum number of allottees for each

placement of eligible securities made under qualified
institutional placement is not less than:
• two, where the issue size is less than or equal to
two hundred and fifty crore rupees;
• five, where the issue size is greater than two
hundred and fifty crore rupees:
53. Check the copy of special resolution for allotment with

respect to completion of allotment within a period of
twelve months from the date of passing of the
resolution.
54. Check whether the issuer company has complied with

clause 35 of Listing Agreement w.r.t shareholding
pattern.
55. To check if the Information Memorandum has been

privately circulated duly numbered to the prospective
investors
56. To check if return of allotment has been filed within the

stipulated time with the ROC.
INDIAN DEPOSITORY RECEIPTS

Under section 2(48) of the Companies Act, 2013 “Indian Depository Receipt” means any instrument
in the form of a depository receipt created by a domestic depository in India and authorised by a
company incorporated outside India making an issue of such depository receipts.
Section 390 read with rule 13 of Companies (Registration of Foreign Companies) Rules, 2014
provides that no company incorporated or to be incorporated outside India, whether the company
has or has not established, or may or may not establish, any place of business in India shall make an
issue of Indian Depository Receipts (IDRs) unless such company complies with the conditions
mentioned under this rule, in addition to the Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2009 and any directions issued by the Reserve
Bank of India.
57. The issuer is required to appoint the Compliance officer

for the compliances.
58. Check whether the company is compliant with the

eligibility criteria as mentioned in these regulations and
the aforesaid rules.
59. Check whether the issuing company obtained prior

written approval from the Securities and Exchange
Board of India on an application made in this behalf for
issue of IDRs along with the issue size.
60. Check whether the company has received the minimum

subscription as per the regulations; if not the issuer
company refunded money within:
In case of non-underwritten issues: within fifteen days
from the date of the closure of the issue
In case of underwritten issues: Within sixty days from
the date of closure of the issue.
61. The pre issue advertisement has been made in specified

newspapers at least three days before the opening of
the issue, containing the details as specified in the
regulations.
(The PCS may check the copies of newspaper clippings
for the compliance of same.)
62. The merchant banker is required to submit post-issue

reports to the Board. The post-issue reports shall be
submitted as follows: (a) initial post issue report on the
lines of Parts A and B of Schedule XVI of SEBI (ICDR)
Regulations, 2009, within three days of closure of the
issue; (b) final post issue report on the lines of Parts C
and D of Schedule XVI of SEBI (ICDR) Regulations, 2009,
within fifteen days of the date of finalisation of basis of
allotment or within fifteen days of refund of money in
case of failure of issue. (The PCS may check the copies
of such reports)
63. A limited two way fungibility for IDRs is permitted.

Check the compliance with RBI circulars (Department
of Foreign Exchange) with regard to fungibility of IDR’s

Date: Date:

F. Issue of Securities through employee stock option
Compliance by an Unlisted Company
 A unlisted Company issuing securities to employees under employee stock option shece has
to comply with the provisions of Section 62(1)(b) read with rule 12 of Companies(Share
Capital and Debentures) Rules 2014.
Compliance listed Company
 A listed Company has to comply with Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014, listing agreement read the provisions of Section
62(1)(b) and rule 12 of Companies(Share Capital and Debentures) Rules 2014.
Securities and Exchange Board of India (Share Based Employee Benefits) Regulations,
2014 (these regulations)
The Securities Exchange Board of India (SEBI) on 28 October 2014 has notified New
Regulations called Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014 which have replaced the erstwhile ESOP guidelines. The New Regulations are
effective from the date of notification of these regulations.
Applicability of these regulations
The provisions of these regulations shall apply to any company whose shares are listed on a
recognised stock exchange in India, and has a scheme:
(i) for direct or indirect benefit of employees; and
(ii) involving dealing in or subscribing to or purchasing securities of the company, directly or
indirectly; and
(iii) satisfying, directly or indirectly, any one of the following conditions:
a. the scheme is set up by the company or any other company in its group;
b. the scheme is funded or guaranteed by the company or any other company in its
group;
c. the scheme is controlled or managed by the company or any other company in its
group.
Types of schemes covered under these regulations
The provisions of these regulations shall apply to following, -
(i) employee stock option schemes;
(ii) employee stock purchase schemes;
(iii) stock appreciation rights schemes;
(iv) general employee benefits schemes; and
(v) retirement benefit schemes.
Treatment of Preferential allotment to employees
 Nothing in these regulations shall apply to shares issued to employees in compliance with
the provisions pertaining to preferential allotment as specified in the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

 The provisions pertaining to preferential allotment as specified in the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
shall not be applicable in case of a company issuing new shares in pursuance and
compliance of these regulations.
Section 62(1) (b) of the Companies Act, 2013, Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014 and the listing agreement are applicable for listed
companies while private and unlisted public companies are required to follow the articles of
association, the Companies Act, 2013 and the rules made thereunder.
Checklist for compliances under Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 and Companies Act 2013
For listed companies
1. Whether the company has used the direct route or

through irrevocable trust route for issue of ESOP ?
2. Whether the implementation through trust was

decided upfront at the time of taking approval of the
shareholders for setting up of the schemes.
3. In case the scheme involves secondary acquisition or

gift or both, whether the scheme is mandatorily
implemented through trust
4. Whether a director, KMP, promoter,

holding/subsidiary/associate companies, any relative
of director/KMP/promoter, any person beneficially
holder ten percent or mote of the paid up capital of the
company is not appointed as trustee
5. Whether approval of shareholders is obtained

authorising the trust to implement the scheme
6. Whether the trust deals only in delivery based

transactions and not in derivatives
7. whether secondary acquisition in a financial year by a

trust does not exceed two percent of the paid up capital
as at the end of the previous financial year
8. whether the total number of shares under secondary

acquisition held by the trust is within the prescribed
limits
9. whether the trust holds shares acquired through

secondary acquisition for a minimum period of six
months

10. whether the off market transfers by the trust has been
made only under circumstances specified in these
regulations
11. whether the trust sells shares in the secondary market
only under the circumstances specified under these
regulations
12. whether the company has constituted compensation
committee for administration of the scheme
13. whether the employee is eligible to participate int he
scheme
14. whether the scheme is approved by the shareholders
through special resolution
15. Check whether the explanatory statement to the special
resolution complies with Rule 12 of the Companies
(share Capital and Debentures) Rules 2014
16. Check whether other procedural aspects as prescribed
under Rule 12 of Companies (share Capital and
Debentures) Rules 2014
17. whether the specified disclosures as prescribed under
Rule 12 of Companies (share Capital and Debentures)
Rules 2014 has been made in the Board’s Report
18. whether the company has complied with prescribed
norms for varying the terms of the schemes
19. whether unlisted companies going for IPO, complies
with the provisions prescribed with regard to Pre-IPO
scheme
20. whether the board of directors place auditor’s
certificate, certifying compliance under these
regulations, before the shareholders in annual general
meeting
Compliance with respect to specific schemes
Employee Stock Option Scheme
1. Whether the minimum vesting period is one year

2. Whether the disclosures specified have been made to prospective option grantees
3. Whether employee does not receive dividend or vote till the exercise of option
Employee Stock Purchase Scheme
1. Whether shares issued under ESPS is locked in for a minimum period of one year from the
date of allotment
2. Whether ESPS forming part of public issue are issued at the same price as in the public
issue?

3. Whether ESPS scheme contains the details of the manner in which the scheme will be
implemented and operated
Stock Appreciation Rights Scheme(SARS)
1. Whether SARS contains the details of the maner of implementation
2. Whether specified disclosures has been made to the prospective SAR grantees
General Employee Benefits Scheme(GEBS)
1. Whether GEBS contains the details of the maner of implementation
2. Whether , the shares of the company or shares of its listed holding company does not
exceed ten per cent of the book value or market value or fair value of the total assets of
the scheme, whichever is lower, as appearing in its latest balance sheet for the purposes
of GEBS, at any point of time.
RETIREMENT BENEFIT SCHEME (RBS)

Whether the retirement benefit scheme contains the details of the benefits under the scheme
and the manner in which the scheme shall be implemented and operated.
1. whether the shares of the company or shares of its

listed holding company does not exceed ten per cent of
the book value or market value or fair value of the total
assets of the scheme, whichever is lower, as appearing
in its latest balance sheet for the purposes of RBS at any
point of time.
2. The company has obtained In Principle approval
from the stock exchange.
3. Form No. PAS. 3 as per Companies (Prospectus
and Allotment of Securities) Rules, 2014, Form No. SH.7
as per Companies (Share Capital and Debentures) Rules,
2014 and Form No. MGT.14 as per Companies
(Management and Administration) Rules, 2014, as
applicable, has been filed with ROC.
4. Check if listing approval by stock exchange(s) was
granted for shares arising after IPO out of options
granted under a scheme prior to the IPO, upon exercise
subject to compliance with SEBI (ICDR) Regulations,
2009.
5. Check the copy of the in principle approval granted by
the stock exchange under clause 24 (a) of the listing
agreement.
6. Check compliance with Relevant clauses of listing
agreement.
Date: Date:

G. SEBI (Issue and Listing of Debt Securities) Regulations, 2008
These regulations are applicable to:
(a) public issue of debt securities and
(b) listing of debt securities issued through public issue or on private placement basis on a
recognized stock exchange.
“Debt securities” means non-convertible debt securities which create or acknowledge
indebtedness, and include debentures, bonds and such other securities of a body corporate or
any statutory body constituted by virtue of a legislation, whether constituting a charge on the
assets of the body corporate or not, but excludes bonds issued by Government or such other
bodies as may be specified by SEBI, security receipts and securitized debt instruments. For
issue of convertible debt securities, SEBI (ICDR) Regulations, 2009 are applicable.
IA. Checklist for compliances under SEBI (Issue and Listing of Debt Securities) Regulations,
2008
For Non Convertible Debt securities
1. There is no restraining, prohibiting, or debarring

order against the company or any of its promoter by
SEBI or any other regulatory authority.
(Note: PCS may mention the details of the order, if any,
in the audit report as a qualification).
2. The company has appointed one or more merchant

bankers in case of a public issue and a debenture
trustee registered with SEBI.
3. The company has obtained credit rating from atleast

one rating agency registered with SEBI.
[Note: The PCS may check the copy of the credit rating
certificate for verifying the same]
4. The company has obtained in-principle approval from
the stock exchange to list its non-convertible debt
securities.
5. The company has entered into a tripartite agreement
with the RTA and the depositories.
[Note: The PCS may check the agreement for
verifying the same.]
6. The Debenture Trust Deed has been executed in Form
No. SH.12 as per Companies (Share Capital and
Debentures) Rules, 2014, by the company in favour of
the debenture trustees within sixty days of allotment of
debentures.

7. Debenture Redemption Reserve has been created as
provided in sub-rule (7) of Rule 18 of Companies (Share
8. The final offer document has been filled with the

Registrar of Companies, SEBI and designated stock
exchange.
9. In case company has opted to file a Shelf Prospectus or a

Shelf Information Memorandum the updated
documents for any further fund raising under the Shelf
Document is filed with ROC / Designated Stock
exchange.
10. The information memorandum has contained the

disclosures as specified in Companies Act, 1956 or
Companies Act, 2013, whichever is applicable and rules
made thereunder and has also included disclosures
regarding summary term sheet, material updations
including revisions in ratings, if any along with the
rating rationale and financial ratios specified in
Schedule I of SEBI (Issue and Listing of Debt Securities)
indicating the pre and post issue change.
11. In case the 75% of minimum subscription of the base

issue size has not been received by the company, the
entire money has been refunded within 12 days from
the date of the closure of the issue.
(Note: The PCS may check from the statement of escrow
account which is opened for the purpose of debt issue)
12. In case there has been a delay in the aforesaid refund,
the company has returned the subscription amount
along with interest at the rate of 15% per annum for the
delayed period.
13. The company has retained the over subscription money
up to the maximum of 100% of Base issue size or any
lower limit as specified in the offer document.
14. If the company has filed shelf prospectus, then it has
retained over subscription up to the rated size, as
specified in their shelf prospectus.
15. The company has created a charge or security, if any, in
respect of secured debt securities has been disclosed in
the offer document along with its implication e- form
CHG-9 has been filed with the ROC regarding creation of
charge on the debt securities.

16. In case of rollover of debt securities, it has been
approved by the holder of the debt securities by a
passing a special resolution and e- form MGT – 14 has
been filed with ROC for such purpose.
17. In case the holders of the debt securities has not given
their positive consent to the roll over, the company has
redeemed the debt securities of all the debt securities
holders.
18. The Company has obtained final listing and trading

approval from the stock exchanges where it proposes to
list its securities.
19. The company has passed resolution by the Board of

Directors for allotment of securities specifically making
a mention of total number of securities allotted /
allocated by it.
20. Allotment is completed within 12 days of the closure of

the issue and Form No. PAS 3 regarding allotment of
debentures as per Companies (Prospectus and
Allotment of Securities) Rules, 2014 is filed with the
ROC within 30 days of allotment.
21. Letter from Registrars and lead manager confirming

dispatch of share / debenture/ warrant certificates,
allotment advice, refund orders, underwriting
commission, uploading of electronic credit of Securities,
uploading of ECS/NEFT/RTGS credits and brokerage
warrants.
22. Certificate from the Registrar reconciling the total

securities allotted with the total securities credited with
the depositories, and securities that have failed to be
credited.
23. [Note: The PCS may check the copy of the basis of
allotment.]

Date: Date:
NOTE : As Per The Proposed Listing Regulations, Any Fund Raising Activity Would Require Prior
Intimation Of Board Meeting And Agm/Egm Approving The Issue To The Stock Exchange And The
Uploading Of The Information On The Company Website Immediately After Conclusion Of The Board
Meeting

IB. Compliance of Debt Listing Agreement for Public issue and Listing of Non Convertible
Debt Securities
The company has to comply with PART A of the debt listing agreement in case the equity
shares of the company are listed on the stock exchange.
1. The company has obtained a half- yearly certificate

regarding maintenance of 100% asset cover in respect
of listed debt securities by either a Practicing Company
Secretary or a Practicing Chartered Accountant, along
with the half yearly financial results which has also
been submitted to the debenture trustee. [ clause 2(d)]
2. The company has disclosed on half- yearly basis and in
their annual financial statements the extent and nature
of security created and maintained, in respect of its
listed debt securities. [clause 5 ]
3. The company has sent to the stock exchange for
dissemination, along with the half yearly financial
results, a half yearly communication, counter signed
by trustees, containing inter- alia the following
information
(a) credit rating ;
(b) asset cover available;
(c) debt - equity ratio;
(d) previous due date for the payment of interest /
principal and whether the same has been paid or
not; and
(e) next due date for the payment of interest/
principal. [clause 6]
4. In case of expected default in timely payment of interest
or redemption or repayment amount or both in respect
of the debt securities , the same has been notified to the
stock exchange.
5. In case allotment of debt securities has not been made
or refund orders has not been dispatched to the
investor within 30 days of the closure of the public
issue, the company has paid interest @ 15% per annum.
6. In case the equity shares of the company has delisted,
the company has complied with Part B of the debt
listing agreement.
[Note : The PCS may check the half yearly compliance
report given by the compliance officer, submitted to the
Board for verifying the above.]

IIA. Checklist for issuance of Non Convertible Debentures on private placement basis under
SEBI (Issue and listing of debt securities ) Regulations, 2008
‘’Private placement” means any offer of securities or invitation to subscribe securities to a select
group of persons by a company ( other than by way of public offer) through issue of a private
placement offer letter and which satisfies the conditions specified in section 42 of the Companies
Act, 2013.
A company issuing NCDs on private placement basis has to comply with Section 42 and Rule 14 of
the companies (Prospectus and Allotment of securities) Rules, 2014 and RBI guidelines issued for
NBFCs, in addition to SEBI (Issue and Listing of Debt Securities) Regulations, 2008. The companies
Act, 2013 provisions have discussed earlier.
1. The company has passed a resolution for issuance of

NCDs in its board meeting.
(Note: The PCS may check the copy of the resolution
passed.)
2. The company has passed a resolution for issuance of

NCDs in its board meeting
(Note: The PCS may check the copy of the resolution
passed.)
3. The company has appointed a debenture trustee and

Registrar and share Transfer Agents.
4. The company has executed tripartite agreement with

the RTA and Depositories for demat of NCDS.
5. The company has obtained One- time registration for

online complaint redressal system-SCORES with SEBI.
6. The company has obtained credit rating from atleast

one credit rating agency registered with SEBI.
7. In case of revision in rating, during periodical review by

the credit rating agency , the same has been intimated
to the stock exchanges where the debt securities are
listed, the investors and the perspective investors.
8. The company has obtained final listing approval from

the Stock Exchange to list its Debt securities.
9. The company has made disclosures in a disclosure

document as specified as scheduled I of these

regulations and the same has been disclosed on the
website of the Stock Exchange where such securities are
proposed to be listed.
10. The relevant documents has been submitted the to the

trustee for security creation.
11. A press release has been issued for disclosing the

information to the investors and the general public in
case of any of the following events by the Debenture
Trustee:
a. default by issuers to pay interest on debt securities

or redemption amount;
b. failure to create a change on the assets ;
c. revision of rating assigned to the debt securities;
(Note : The PCS may check the copy of the press

release)
12. The information as required under point 10 above, has

also been placed on the websites, of the debenture
trustee, the company and the stock exchanges.
13. The company, the debenture trustee and stock

exchange has disseminated all the information and
reports on debt securities including compliance reports
filed by the issuers and the debenture trustee regarding
the debt securities to the investor and the general
public by placing them on their websites.
14. The company has filed the following e- forms with the
Registrar of Companies:
i. MGT-14 with respect to the Board resolution
passe for issuance of NCDs on private placement
basis.
ii. PAS -3 for allotment of debentures
iii. PAS – 4 with respect to private placement offer
letter
iv. PAS-5 with respect to complete record of
placement offer.
(It may be noted that as PAS- 5 format is not
notified by MCA, instead GNL-2 will be filed)

v. CAG-9 with respect to creation & charge on
security, if any.
15. The company has complied with part B of the debt

listing agreement.
(Note : The PCS may check the copy of information
memorandum filed with the stock exchange for
complete verification of each particular information
and default, if any, made by the company.
IIB. Compliance under Debt listing agreement for Listing of NCDs issued on private
placement basis:
For NCDs issued on private placement basis the issuer has to comply with the part – B of Debt
listing agreement, where the equity shares of the issuer are not listed on the stock exchange.
1. The company has transferred to ‘Investor Education &

Protection Fund set up as per section 205C of the
companies Act, 1956 the unclaimed interest, if any
which remains unclaimed and unpaid for a period of 7
years from the date they become due for payment.
(Note : Section 125 of the companies Act,2013
corresponding to section 205C of the Companies Act,
1956 is not yet notified by MCA.) [ CLAUSE 12]
2. The company has obtained a half yearly certificate

regarding maintenance of 100% security covers in
respect of listed debt securities by either a Practicing
Company Secretary or a Practicing Chartered
Accountant, along with the half yearly financial results.
[clause 13(d)]
3. In case the company has not allotted the securities

within 30 days of the closure of the public issue it has
paid interest @ 15% per annum to the investors. [clause
18(b)]
4. The company has maintained 100% asset cover

sufficient to discharge the principal amount at all times
for the debt securities issued and has disclosed to the
exchange on half yearly basis and in their annual
financial statements, the extent and nature of security
created and maintained. [clause 16(a)]
5. The company has appointed a company secretary or

any other person as Compliance Officer. clause 22]

6. The company has furnished to the stock exchange on a
half yearly basis, a statement indicating material
deviations, if any, in the use of proceeds [clause
19A(9)].
7. The information mentioned in point 6 has been

furnished to the Stock Exchange alongwith the half
yearly financial results furnished under clause 29
of debt listing agreement to the stock exchange and the
same has also been published in the newspaper
simultaneously with the half yearly financial result
[clause 19A(b)].
8. The company has sent to its holders of debt securities

and also to the Stock Exchange for dissemination:
A. Notice of all meetings of the debt securities
holder specifically stating that the provisions for
appointment of proxy as mentioned in Section
105 of the Companies Act,2013 is applicable.
B. A half- yearly communication counter signed by
debenture trustee, along with the half yearly
financial results, containing inter alia, following
information:
i. credit rating;
ii. asset cover available;
iii. debt – equity ratio;
iv. previous due date for the payment of
interest/ principal and whether the same
has been paid or not; and
v. next due date for the payment of interest /
principal. [ clause 27]
9. The company has made annual disclosure in the annual

report as prescribed under clause 28.
10. The company complied with the requirement with

respect to half yearly financial results as prescribed
under clause 29.
[Note: The PCS may request to compliance officer to
provide him / her the Half yearly compliance report
with respect to the debt listing compliance submitted to
the Board of Directors and stock exchange for verifying
the requirements as mentioned above.

H. SEBI (Registrar to an Issue and Share Transfer Agents) Regulations, 1993
All the work related to share registry in terms of both physical and electronic is maintained at a
single point i.e. either in-house by the company or by a SEBI registered R & T Agent. The
registrars and share transfer agents (RSTA) are required to:
• maintain records of all the shares dematerialized, rematerialized and details of all securities
declared to be eligible for dematerialization in the depositories and ensure that
dematerialization of shares shall be confirmed/created only after an in-principle approval
of the stock exchange/s where the shares are listed and the admission of the said share with
the depositories have been granted.
• have proper systems and procedures in place to verify that the securities tendered for
dematerialization have not been dematerialized earlier.
• ascertain, reconcile daily and confirm to the depositories that the total number of shares
held in NSDL, CDSL and in the physical form tallies with the admitted, issued and listed
capital of the issuer company; and
• confirm that the dematerialization requests have been processed within 21 days and shall
also state the reasons for shares pending confirmation for more than 21 days from the date
of request.
Checklist for compliances under SEBI (Registrar to an Issue and Share Transfer Agents)
Regulations, 1993
1. The company has appointed an RTA in accordance

with SEBI regulations.
Note : The PCS may check the agreement or MOU
entered into by the company with the RTA.
2. The RTA has obtained a certificate from a practicing

company secretary that all transfers have been
completed within the stipulated time in terms of clause
47 (c) of the listing agreement.

Date: Date:

I. SEBI (Delisting of Equity Shares) Regulations, 2009
Delisting of securities means permanent removal of securities of a listed company from a stock
exchange. Delisting can be voluntary or compulsory. In voluntary delisting, a listed company
decides on its own to permanently remove its securities from a stock exchange by complying
with SEBI (Delisting of Equity Shares) Regulations, 2009. Compulsory delisting refers to
permanent removal of securities of a listed company from a stock exchange as a penalizing
measure at the behest of the stock exchange for not making submission / compliance with
various requirements set out in the listing agreement within the time frame prescribed.
Voluntary Delisting can be again of two types (a) with exit opportunity- In this case the equity
shares would not be listed on any recognized stock exchange having nationwide trading
terminals after the proposed delisting (b) where no exit opportunity is required- In this case
the equity shares would remain listed on any recognized stock exchange which has nationwide
trading terminals after the proposed delisting. In this regard, a PCS has to first check whether
the company has used the exit opportunity method or no exit opportunity method under
voluntary delisting. A company desirous of delisting its securities has to comply with the SEBI
(Delisting of Equity Shares) Regulations, 2009.
Note : PCS may visit the website of stock exchanges, for example, NSE and BSE to check whether a
company has been delisted or not. The stock exchange maintains a separate section where the
name of the companies which are delisted from their stock exchange, is displayed.
Checklist for compliances under SEBI (Delisting of Equity Shares) Regulations, 2009
I. Compulsory delisting
1. i. Check the reasons for which action has been taken

by the recognized stock exchange for compulsory
delisting.
ii. In case there is compulsory delisting, the company/
whole time directors/ its promoters/ companies
which are promoted by any of them has not
accessed the securities market directly or
indirectly or sought listing for any equity shares
for a period of 10 years from the date of such
delisting.
II Voluntary delisting - where no exit opportunity is
required
2. Submission of the resolution approving the delisting
scheme as passed by the Board of Directors of the
Company, in compliance with Regulation 7(1) (a) to
stock exchange.
3. The company has given public notice of proposed
delisting in atleast one English national daily and one
Hindi national daily with wide circulation and one
regional newspaper of the region where the concerned

recognised stock exchange is located. (Note : The PCS
may check the copies of newspaper clippings)
4. The public notice contains:
i. the name of the recognized stock exchanges
from which the equity shares of the company
are intended to be delisted.
ii. the reasons for such delisting.
iii. the fact of continuation of listing of equity
shares on recognized stock exchanges having
nationwide trading terminals.
5. An application has been made to the concerned
recognized stock exchange for delisting of its equity
shares.
6. The application has been disposed of within a period not
exceeding 30 days from the date of receipt of completed
application.
7. The company has disclosed the fact of delisting in the
first annual report of the company prepared after such
delisting.
III. Voluntary delisting - where exit opportunity is given
8. The application for delisting of equity shares was made
to the concerned stock exchange.
9. Certified copy of the resolution passed by the Board of

Directors approving the delisting scheme is in
compliance with Regulation 8 (1) (a), and has been
submitted to stock exchange.
10. The company has intimated the Stock exchange

regarding the outcome of the Board Meeting as required
under clause 36 (7) (iv) of Listing Agreement.
11. Prior approval of members has been obtained by postal
ballot for the delisting process with atleast two third
majority.
12. The company has filed Form No. MGT. 14 as per
Companies (Management and Administration) Rules,
2014, required for registration of special resolution with
RoC.
13. Submission of application to stock exchange for in-
principle approval for delisting of equity shares along
with the copy of the audit report as required under
regulation 55A of SEBI (Depositories and Participants)
Regulations, 2009.

14. The in-principle approval for delisting has been
received from the stock exchange.
15. A public announcement has been made in one English

national daily with wide circulation, one Hindi national
daily with wide circulation and one regional language
newspaper of the region regarding the delisting
proposal.
16. The company has disclosed all the material information

in the public announcement including the information
specified in Schedule I of the Regulations. (Note: Refer
Schedule I)
17. The public announcement is signed and dated by the

promoter. Where the promoter is a company, the public
announcement has been dated and signed on behalf of
the Board of directors of the company by its manager or
secretary, if any, and by not less than two directors of the
company, one of whom shall be a managing director
where there is one.
18. The public announcement has been published by the
company after the closure of the offer.
19. Before making the public announcement the provisions
related to escrow account contained in regulation 11
have been complied with.
20. The public announcement was made within eight
working days of the closure of the offer regarding:
(i) Success of the offer under regulation 17.
(ii) Failure of the offer under regulation 19.
(iii) Rejection under regulation 16 of the final
price discovered under Schedule II by the
promoters.
21. Regulation 20 regarding payment of consideration on
success of the offer and return of equity shares have
been complied with.
22. The final application has been made to the concerned
stock exchange(s) for delisting of equity shares.
23. Check the order of the recognized stock exchange
granted to the company for delisting.

Date: Date:

J. SEBI (Buyback of Securities) Regulations, 1998
Buy-back of shares means the purchase by the company of its own shares. Buyback of equity
shares is an important mode of capital restructuring. It is a corporate financial strategy which
involves capital restructuring and prevalent globally with the underlying objectives of
increasing earnings per share, averting hostile takeovers, improving returns to the stakeholders
and realigning the capital structure. Buy Back of securities can be by listed companies and
private and unlisted public companies.
Buy- back of securities by a listed company
Buy-back of Securities by listed Companies is governed by SEBI (Buy-back of Securities)
Regulations, 1998, the Companies Act, 2013 and the rules made thereunder. A listed company
may buy-back its shares or other specified securities by any one of the following methods:—
(a) from the existing security-holders on a proportionate basis through the tender offer;
(b) from the open market through—
(i) book-building process,
(ii) stock exchange;
(c) from odd-lot holders.
Provided that no offer of buy-back for fifteen per cent or more of the paid up capital and free
reserves of the company shall be made from the open market.
Buy— back of Securities by a private and unlisted public company
Buy- back of its own securities by a private and unlisted public company is governed by the
Companies Act, 2013 and the rules made thereunder.MCA has notified rules under the
Companies Act, 2013. For buy-back of securities, provisions of Chapter IV of Companies Act,
2013 consisting of Sections 68, 69 and 70 and Rule 17 of Companies (Share Capital and
Debentures) Rules, 2014 will be applicable.
Checklist for compliance requirement under SEBI (Buyback of Securities) Regulations, 1998
and the Companies Act, 2013
Buyback of Securities by a listed company
1. The method used for buy-back of securities is in

compliance with regulation 4.
2. The buy-back of securities is authorized by the articles

of association and if not, they were amended and
special resolution passed for the amendment is filed
with the stock exchange and RoC.
3. Company has filed Form No.MGT.14 as per Companies

(Management and Administration) Rules, 2014 with the
Roc in respect of the special resolution.
4. In case of buy-back where the first proviso of Section

68 (2) (b) of Companies Act, 2013 is applicable, board
resolution has been passed approving the buy-back and
the resolution has been filed with the stock exchange
and SEBI.
5. The company has filed a letter of offer in Form No.

SH.8 as per Companies (Share Capital and Debentures)
Rules, 2014 with fee with RoC before the buy-back of
securities. Further, such letter of offer has been dated
and signed on behalf of the Board of Directors of the
company, by not less than two directors , one of whom
shall be the managing director, where there is one.
6. The explanatory statement has been annexed to the

notice of the general meeting pursuant to section 102 of
the Companies Act, 2013 and contains the disclosures
as specified in Part A of Schedule II of these regulations.
(Note: Refer Part A of Schedule II )
7. The public announcement contains all the material

disclosures required under Schedule II of these
regulations. Further, the announcement has been made
in at least one english national daily, one hindi national
daily and a regional language daily all with wide
circulation at the place where the registered office of
the company is situated within 7 days of passing of
special resolution.
8. In case of buy-back through stock exchanges, the public
announcement contains details of the brokers and stock
exchanges through which the buy-back of shares or
other specified securities would be made.
9. In case of buy-back through book building process, the
public announcement contains the detailed
methodology of the book-building process, the manner
of acceptance, the format of acceptance to be sent by the
security-holders pursuant to the public announcement
and the details of bidding centres.
10. The soft copy of public announcement has been filed
with SEBI through the merchant banker.
11. Buy-back has been made on a stock exchange having
nation-wide trading terminals.
12. In case of buy-back through book building process, the

book-building process has been made through an
electronically linked transparent facility.
13. The company has filed with SEBI the declaration of

solvency under these regulations pursuant to Section 68
(6) of the Companies Act, 2013 and with RoC in Form
No. SH.9 as per Companies (Share Capital and
14. The declaration of solvency is signed and verified by

atleast two directors, one of whom is the managing
director of the company, if any.
15. The company maintains a record or register of security
certificates which have been cancelled and destroyed in
Form No. SH10 as per Companies (Share Capital and
16. The company has opened an escrow account and
special account as required under these Regulations.
17. The certificate that the securities bought back have
been extinguished within seven days of the last date of
completion of buy–back is duly certified and verified
by–
i. the registrar and where there is no registrar,
by the merchant banker;
ii. two directors of the company one of whom
shall be a managing director where there is
one;
iii. the statutory auditor of the company.
18. The certificate of extinguishment has been filed with
SEBI and the stock exchange on a monthly basis by the
seventh day of the month succeeding the month in
which the securities certificates are extinguished and
destroyed.
19. The company has filed with SEBI, a return containing
such particulars relating to buy-back of securities
within 30 days of completion of buy-back and with the
RoC in Form No. SH.11 as per Companies (Share Capital
20. Return filed with RoC in Form No. SH.11 include
certificate of compliance in Form No. SH.15 signed by
two directors of the company including the managing
director, if any, certifying that buy-back of securities has
been made in compliance with the provisions of the Act
and the rules made there under.
Date: Date:

K. Listing Agreement
Stock exchanges are platforms for dissemination of information by companies. In addition to its
primary function of providing liquidity for securities, it facilitates purchase/sale of securities.
Before permitting the securities for listing, it requires companies to enter into listing agreement
for ensuring compliances including intimations/publications which are generally:
i. Time based compliances such as filing of shareholding pattern every quarter, publication of
quarterly/annual financial statements, quarterly Corporate Governance Report, etc.
ii. Event based compliances such as intimations regarding corporate actions, proposed change
in the general character or nature of its business, corporate restructuring of the company
resulting in a change exceeding +/- 2% of the total paid-up capital, etc.
Checklist on major Compliances under Listing Agreement
Sl. Clause Particulars Complied Remarks

No.
1. 5A The company has followed the prescribed procedure,

with respect to shares issued (physical and demat)
pursuant to the public issues or any other issue, which
remain unclaimed and are lying in the escrow account.
2. 13 The company has promptly notified the Stock Exchange,

of any attachment or prohibitory orders restraining the
Company from transferring securities.
3. 14 The company maintains transfer registers as required by

the stock exchange.
4. 16 The company had closed its transfer books at least once a
year at the time of Annual General Meeting, after giving
Stock Exchange notice in advance of at least seven
working days ;
The company closed its transfer books for corporate
actions, after giving advance notice to stock exchanges, of
7 working days before such corporate actions;
The time gap between two book closures and record
dates was atleast 30 days.
5. 19(a) The company has notified the stock exchange at least 2
working days in advance of the date of the meeting of its
Board of Directors at which the recommendation or
declaration of a dividend or convertible debentures or of
debentures carrying a right to subscribe to equity shares
or the passing over of the dividend or the issue of right is
due to be considered. The company has declared all
dividend and/or cash bonuses at least five days before
commencement of the closure of its transfer books or the
record date fixed for the purpose.

19(d) The Company has given prior notice of at least 2 working
days to the stock exchanges about the board meeting at
which the proposal for buy back of securities is to be
considered
19(e) In case of a FPO made through fixed price route the
company has notified the stock exchange at least 48
hours in advance, of the proposed meeting of its Board of
Directors convened for determination of issue size.
6. 20 The company has intimated the stock exchanges, within
15 minutes of closure of the Board meeting by phone, fax,
e-mail, where all dividends and/or cash bonuses were
recommended or declared or the decision to pass any
dividend or interest payment, decision of buy-back is
taken and other business considered by the Board
7. 22 The company has intimated the stock exchanges within
15 minutes of closure of the Board meeting that
considered and decided on increase of capital, re-issue of
forfeited shares and other businesses specified in the
clause by phone, fax, or e-mail.
8. 24 The company has obtained in principle approval for
listing of its securities ;
The Company has filed with the stock exchange, for
approval, any scheme/petition proposed to be filed
before any Court or Tribunal under the Companies Act, at
least a month before it is presented to the Court or
Tribunal.
9. 25 If any option to purchase any shares was granted, the
company notified the number of shares covered by such
options, the terms and the time available for exercising
the options and all subsequent changes or cancellation or
exercise of such options.
10. 27 The company has notified promptly to the stock
exchange, of any action leading to redemption,
cancellation or retirement in whole or in part of any
securities of the intention to draw the securities, the date
and period of closing books for such drawing and the
amount of securities outstanding after such drawing.
11. 28 The company has given 21 days prior notice to stock
exchange, before making any change in the nature of
shares listed or in the benefits to their holders.
12. 28A The company has not issued shares which give any
persons superior voting rights or dividend on equity
shares that are already listed.

13. 29 The company has promptly notified to the stock
exchange any proposed change in the general nature of
business.
14. 30 The company has notified promptly of any change

— of the Board by death, resignation, removal or
otherwise;
— of the Managing Director;
— of Auditors.
15. 31 The Company has promptly forwarded the following to

the stock exchange immediately after despatch to the
shareholders.
a) Six copies of the statutory and Directors’
Annual reports along with form A or form B
(Please refer the format as prescribed under
this clause) as applicable, Balance sheet and
profit & Loss Account.
b) Six Copies of all notices, resolutions and
circulars relating to new issue of capital prior
to their dispatch to the shareholders.
c) three copies of all notices, call letters or any
other circulars including notices oc meeting
convened u/s 391 or section 394.
d) copy of the proceedings at all Annual and
Extraordinary General Meeting.
e) three copies of all notices, circulars etc. Issued
or advertise, either by the company or by any
other company, which the company proposes
to absorb or amalgamation etc.
31A The company has restated its books of accounts on

directions issued by SEBI or by any statutory authority
as per the provisions of the extant regulatory framework.
16. 32 The company has supplied the documents required

under the clause including cash flow statement, annual
accounts etc.
17. 35 The Company has filed the shareholding pattern

containing details of promoters holding and non-
promoters holding in the prescribed format separately
for each class of equity shares/security one day prior to
listing of its securities on the stock exchanges on
quarterly basis, within 21 days from the end of each

quarter; within 10 days of any capital restructuring of
the company resulting in a change exceeding +/-2% of
the total paid-up share capital.
18. 35A The Company has submitted to the stock exchange,

within 48 hours of conclusion of the General Meeting,
details regarding the voting results in the prescribed
format.
19. 35B The Company has provided e-voting facility to its

shareholders, in respect of all shareholders’ resolutions,
to be passed at general meetings or through postal ballot
and such e-voting has been kept open for such period as
specified under the Companies (Management and
Administration) Rules, 2014 for shareholders to suit
their assent or dissent.
20. 36 The Company has intimated the stock exchange about

strike, lock out, disturbance in business operations,
change in general characteristic of business and all
events which have a bearing in the
performance/operations of the company as well as price
sensitive information both at the time of occurrence of
the event and subsequently.
21. 38 The Company has paid listing fee and annual listing fee
and additional annual listing fee, for listing of securities
of further issues.
The company has paid annual custodial fee to the

depositories as specified by SEBI.
22. 40A The Company has complied with the requirements, of

minimum level of public shareholding as specified in
Rule 19(2) (b) and Rule 19A of the Securities Contracts
(Regulation) Rules, 1957.
23. 40B The company has complied with SEBI (Substantial

Acquisition of Shares and Takeovers) Regulations, 2011,
in case there is a takeover offer made or there is a change
in management control.
24. 41 The company has complied with the conditions relating

to preparation, submission and publication of financial
results. (Quarterly/Annual)
25. 43 The company has furnished a quarterly statement
indicating the variations between projected utilisation of
funds and / or projected profitability statement made by

it in any offer document or in any explanatory statement
and the actual utilisation of funds and/ or actual
profitability.
26. 43A The Company furnished to the stock exchange on a
quarterly basis, a statement indicating material
deviations, if any, in the use of proceeds of a public or
rights issue from the objects stated in the offer document
along with the interim or annual financial results
submitted under clause 41 and has published in the
newspaper simultaneously with the interim or annual
financial results, after placing it before the Audit
Committee in terms of clause 49.
27. 47 The company has:
(a) appointed the Company Secretary as the
compliance officer;
(b) undertaken a due diligence of the adequacy of
the facilities with the RTA;
(c) obtained a half yearly certificate from the
Practising Company Secretary with respect to
delivery of share certificates.
28. 49 The company has complied with all the requirements as
prescribed in clause 49.
29. 50 The Company has complied with all the Accounting
Standard issued by ICAI from time to time.
30. 52 The Company has filed in the Corporate filling and
Dissemination System (CFDS). The information and
reports as specified by the participating stock exchange
through its compliance officer.
(This clause is applicable to Top 200 Companies as per
market capitalization.)
31. 54 The company maintains a functional website containing
basic information about the company.
32. 55 The company has submitted business responsibility
report describing the initiatives taken by the company
from an environmental, social and governance
perspective, in the prescribed format suggested by SEBI.
(This Clause is applicable to Top 100 Companies Listed
on NSE and BSE as per Market capitalisation.)

Date: Date

Matters Compulsorily to be Placed on the Website of the Company
Clause Requirements As Per Listing Agreement Status of Reasons for Remarks

the website Non Updation
41 Quarterly unaudited /audited financial

Results of the company
41 Annual audited financial Results of the

company
47 (f) Email ID of the grievance redresser

division/ compliance officer exclusively
for the purpose of registering
complaints by investors.
49 (II ) The terms and conditions of

(B) (4) appointment of independent director
(b) shall be disclosed on the website of the
Company.
49 (II ) The details of familiarization

(B) (7) programmes for Independent directors
(b) shall be disclosed on the company's
website and a web link thereto shall also
be given in the Annual Report.
49 (II) The code of conduct for the Board and

(E) (1) Senor Management shall be posted on
& 49 the website of the company
(VIII
(D) (3)
49 (II) The Whistle Blower Policy shall be

(F) (3) disclosed by the company on its website
49 (V) The company shall formulate a policy for

(D) determining ‘material’ subsidiaries and
such policy shall be disclosed on the
Company’s website and a web link
thereto shall be provided in the Annual
Report
49 The company shall disclose the policy on

(VIII) dealing with Related Party Transactions
(A) (2) on its website and a web link thereto
shall be provided in the Annual Report.

49 The company shall publish its criteria of
(VIII) making payments to non-executive
(C) (3) directors in its annual report.
Alternatively, this may be put up on the
company’s website and reference drawn
thereto in the annual report.
49 Quarterly results and presentations

(VIII) made by the company to analysts shall
(E) (3) be put on company’s web-site, or shall
be sent in such a form so as to enable the
stock exchange on which the company is
listed to put it on its own web-site.
49 Corporate Governance Report
53 Disseminate through immediately upon

entering into agreements with media
companies and/or their associates, the
following information:-
(a) Disclosures regarding the
shareholding (if any) of such
media companies/associates in
the issuer company.
(b) Any other disclosures related to
such agreements, viz., details of
nominee of the media companies
on the Board of the issuer
company, any management
control or potential conflict of
interest arising out of such
agreements, etc.
(c) Disclosures regarding any other
back to back treaties /
contracts/agreements/MoUs or
similar instruments entered into
by the issuer company with media
companies and / or their
associates for the purpose of
advertising, publicity, etc.
54 To display on its website :
 details of its business,
 financial information,
 shareholding pattern,
 compliance with corporate
governance,

 contact information of the
designated officials of the
company who are responsible
for assisting and handling
investor grievances,
 details of agreements entered
into with the media companies
and/or their associates, etc.
***

4
FOREIGN DIRECT INVESTMENT
The Reserve Bank of India (RBI) has issued Foreign Exchange Management (Transfer or Issue of
Security by a Person Resident outside India) Regulations 2000 (the Regulations)which inter alia
provides for the issue or acquisition of shares / convertible debentures and preference shares,
manner of receipt of funds, pricing guidelines and reporting of the investments to the Reserve Bank.
Foreign Direct Investment (FDI) in India is undertaken in accordance with the FDI Policy which
is formulated and announced by the Government of India. The Department of Industrial Policy and
Promotion, Ministry of Commerce and Industry, Government of India issues a “Consolidated FDI
Policy Circular” on an yearly basis on March 31 of each year elaborating the policy and the process
in respect of FDI in India, that incorporates the amendments made to the regulations. Reserve Bank
of India also compiles all the circulars issued, through a master circular on foreign investment in
India(master circular)which is issued on July 01st of every year. The latest circular issued on July
01, 2014which has been updated upto February 09, 2015. The circular is available at
www.rbi.org.in.
Under the Foreign Direct Investments (FDI) Scheme, investments can be made in shares,
mandatorily and fully convertible debentures and mandatorily and fully convertible preference
shares1 of an Indian company by non-residents through two routes.
Automatic Route : Under the Automatic Route, the foreign investor or the Indian company does
not require any approval from the Reserve Bank or Government of India for the investment.
Government Approval Route : Under the Government Route, the foreign investor or the Indian
company should obtain prior approval of the Government of India(Foreign Investment Promotion
Board (FIPB), Department of Economic Affairs (DEA), Ministry of Finance or Department of
Industrial Policy & Promotion, as the case may be) for the investment.
Prohibited activities/ sector as provided under FDI Policy
1. Lottery business including Government/ private lottery, online lotteries, etc.
2. Gambling and betting including casinos, etc.
3. Chit funds
4. Nidhi company
5. Trading in TDRs
6. Real estate business or construction of farm houses
It is clarified that “real estate business” means dealing in land and immovable property with
a view to earning profit or earning income therefrom and does not include development of
townships, construction of residential / commercial premises, roads or bridges, educational
institutions, recreational facilities, city and regional level infrastructure, townships
7. Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco
substitutes

8. Activities/ sectors not open to private sector investment, e.g., Atomic Energy and Railway
Transport (other than Mass Rapid Transport Systems). Foreign technology collaboration in
any form including licensing for franchise, trademark, brand name, management contract is
also prohibited for Lottery Business and Gambling and Betting activities.
Type of instruments to be issued to person resident outside India
Indian companies can issue equity shares, fully and mandatorily convertible debentures and
fully and mandatorily convertible preference shares and warrants subject to the pricing guidelines/
valuation norms and reporting requirements amongst other requirements as prescribed under
FEMA Regulations.
(i) As far as debentures are concerned, only those which are fully and mandatorily convertible
into equity, within a specified time, would be reckoned as part of equity under the FDI
Policy.
(ii) Prior to December 30, 2013, issue of other types of preference shares such as non-
convertible, optionally convertible or partially convertible, were to be in accordance with
the guidelines applicable for External Commercial Borrowings (ECBs). On and from
December 30, 2013 it has been decided that optionality clauses may henceforth be allowed
in equity shares and compulsorily and mandatorily convertible preference
shares/debentures to be issued to a person resident outside India under the Foreign Direct
Investment (FDI) Scheme. The optionality clause will oblige the buy-back of securities from
the investor at the price prevailing/value determined at the time of exercise of the
optionality so as to enable the investor to exit without any assured return.
(iii) Further, w.e.f. February 03, 2015, all future investments by eligible investors within the
limit for investment in corporate bonds shall be required to be made in corporate bonds
with a minimum residual maturity of three years. Further, all future investments against the
limits vacated when the current investment runs off either through sale or redemption,
shall be required to be made in corporate bonds with a minimum residual maturity of three
years. FPIs shall not be allowed to make any further investment in liquid and money market
mutual fund schemes. FPIs shall not be allowed to make any further investment in CPs.
(iv) Further, w.e.f. February 05, 2015, eligible investors shall be permitted to invest in
government securities, the coupons received on their existing investments in government
securities. These investments shall be kept outside the applicable limit (currently USD 30
billion) for investments by FPIs in government securities
REPORTING OF FDI INFLOW AND REPORTING OF ISSUE OF ELIGIBLE INSTRUMENTS ONLINE
THROUGH DIGITALLY SIGNING
With a view to promoting the ease of reporting of transactions under foreign direct investment,
the Reserve Bank of India, under the aegis of the e-Biz project (Secure one-stop-shop for all
investment and business related information and services 24X7 on a single portal) of the
Government of India has enabled the filing of the following returns with the Reserve Bank of India
viz. Advance Remittance Form (ARF) - used by the companies to report the foreign direct
investment (FDI) inflow to RBI; and FCGPR Form - which a company submits to RBI for reporting
the issue of eligible instruments to the overseas investor against the above mentioned FDI inflow.
The design of the reporting platform enables the customer to login into the e-Biz portal,
download the reporting forms (ARF and FCGPR), complete and then upload the same onto the
portal using their digitally signed certificates. The Authorised Dealer Banks (ADs) will be required
to download the completed forms, verify the contents from the available documents, if necessary by

calling for additional information from the customer and then upload the same for RBI to process
and allot the Unique Identification Number (UIN).
The ARF and FCGPR services of RBI, is being operational on the e-Biz platform from February
19, 2015.
Steps involved
Step 1: Visit eBiz site
Step 2: Register as a New Member
Step 3: Register Organization
Step 4: Download Form
Step 5: Fill the e-form
Step 6: Upload and Submit Form
Step 7: Make payment
Step 8: Check status (with e-biz with application number generated.
It may be noted that for the present, the online reporting on the e-Biz platform is an additional
facility to the Indian companies to undertake their ARF and FCGPR reporting and the manual
system of reporting as prescribed would continue till further notice.
The ADs will be required to access the e-Biz portal (which is hosted on the National Informatics
Centre (NIC) servers) using a Virtual Private Network (VPN) Account obtained from NIC. The
financial aspects for obtaining/using the VPN accounts is being finalised by RBI in consultation with
Government of India, DIPP and NIC. The same will be informed in due course. AD Category-I banks
may bring the contents of this circular to the notice of their customers / constituents concerned.
They are advised to extend due cooperation/assistance to their constituents for uploading the
abovementioned forms on the e-Biz platform.
Checklist on Foreign Direct Investment under Automatic Route
Sl. No. Particulars
1. Check the eligibility of the person investing in FDI.
2. Check whether the total FDI is within the sectoral cap and
not under prohibited sectors.
3 Check whether the company has complied with pricing

guidelines for FDI while issuing fresh shares to persons
resident outside India.
4 Check whether consideration received for FDI is as per the

permitted modes of payment.
5 Check whether any rights/bonus issue has not resulted in

FDI exceeding sectoral cap.
6 Check whether the Company has Section I point no 8.d

issued shares under ESOP scheme to persons resident outside
India. If so check whether the face value of shares under ESOP
scheme does not exceed 5% of the paid up capital of the
company. Check whether the shares are allotted to citizens of
Bangladesh/Pakistan.
7 Check whether the Company has converted ECBs into equity

shares ? If so whether the conditions stipulated are fulfilled.
8 Check whether the Company issued equity shares against

import of capital goods/machinery, equipment etc. If so
whether conditions stipulated in this regard is complied.
9 Check whether the company has complied with issue of

shares if any against pre-operative/pre-incorporation
expenses.
10 Check whether the company has issued shares under ADR /
GDR. If so whether conditions stipulated are fulfilled.
11 Check whether the FDI does not exceed sectoral cap as a
result of issue of shares under the scheme of merger.
12 Check whether the guidelines is followed while calculating
total foreign investment
13 Check whether there is any change in FDI due to transfer of
shares from Resident to non resident or non resident to
resident.
14 Check whether the company has informed about the inflow

of funds within 30 days from the date of receipt.
15 Check whether the equity instruments are issued within

180 days of receipt of funds.
16 Check whether the company issuing shares under

automatic route has reported the issue of shares(including
shares issued under ESOP) in form FC-GPR within 30 days
from the date of issue of shares. Also check whether a
certificate from PCS is attached for compliance.
17 Check whether the reporting for FDI for transfer of shares is

made in Form FC-TRS. Check if other Guidelines regarding
transfer of shares, namely, valuation guidelines, sectoral caps
are being complied with. Check if form FCTRS has been filed
with Authorized Dealer Bank within 60 days of remittance.
18 Check whether the reporting of conversion of ECB into

equity in form ECB-2 along with FC-GPR.

19 Check whether the company has reported the issue of
ADR/GDR in prescribed form.
20 Check if the Company has received Unique Identification

Number for each inward remittance received.
21 Check if the Company has received Foreign Direct Investment

(FDI) Registration Number against form FCGPR filed.
22 Check if the Company has received Certificate from Authorized

Dealer Bank for transfer of shares on Form FCTRS. Check if the
Company has recorded transfer in its Books after receipt of
Certificate from Authorized Dealer Bank.
23 Check if Annual Return on Foreign Liabilities & Assets is filed

every year on or before 15th July. The return is to be filed even
if in a particular year, there is no fresh inflow or outflow of
funds.
Checked By Reviewed By
Dated ……………. Dated …………….
Checklist for Foreign Direct Investment under Approval Route
Sl. No. Particulars Reference to Master circular

dated July of 2014
1 Check whether prior approval of Foreign Investment

Promotion Board is obtained for FDI which are in excess of
sectoral cap.
2 Check whether the shares issued to person who is a citizen

of Bangladesh or an entity incorporated in Bangladesh/
Pakistan under the FDI Scheme is with the prior approval
of the FIPB. And is subject to the prohibitions applicable.
3 Check whether the conversion of import payables / pre

incorporation expenses / share swap is treated as
consideration for issue of shares with the approval of FIPB.
4 Check whether the FDI in a non SME has exceeded 24%

of paid up capital or sectoral cap whichever is lower, if such
non SME has industrial licence for products reserved for
SMEs? If so prior approval of FIPB is obtained?
5 Check whether there is any transfer of shares from resident

to non resident which requires FIPB approval.

6 Check whether the Issue of shares to a non-resident against
shares swap i.e., in lieu for the consideration which has
been paid for shares acquired in the overseas company, can
be done with the approval of FIPB.
7 Check whether the company has complied with reporting

requirements for issue of shares under approval route.
(Reporting requirements same as automatic route.)
Also check other points from Automatic Route checklist
which may be applicable, i.e., Filing of Annual Return on
Foreign Liabilities & Assets etc.
Checklist for establishment of branch/liaison/project office in India
Sl. no. Particulars Reference to Master Circular

dated July of 2014
1 Checklist in case of Foreign Company having Place of

business in India (Branch Office/ Liaison Office/ Project
Office)Check if the Company has obtained the approval of
the Reserve Bank of India in form FNC-1.
2 Check if the Office is established within a period of six

months from date of approval or such other period as may
be mentioned in the Approval Letter from RBI and
intimation of such establishment is given to RBI
3 Check if Report has been filed with DGP within 7 days of

establishment of the office.
4 Check if Annual Activity Certificate has been filed every

year with DGIT & RBI. Also check if report to DGP is part of
such Annual Activity Certificate.
5 Check if Company is carrying any activity which would be

deemed to be having a Place of Business in India as per
provisions of Companies Act, 2013 and if compliance under
both CA, 2013 & FEMA has been done.
***

5
DIRECT INVESTMENT BY RESIDENTS IN JOINT
VENTURE/WHOLLY OWNED SUBSIDIARY
ABROAD
Overseas investments in Joint Ventures (JV) and Wholly Owned Subsidiaries (WOS) have been
recognised as important avenues for promoting global business by Indian entrepreneurs. Joint
Ventures are perceived as a medium of economic and business co-operation between India and
other countries. Transfer of technology and skill, sharing of results of R&D, access to wider global
market, promotion of brand image, generation of employment and utilisation of raw materials
available in India and in the host country are other significant benefits arising out of such overseas
investments. They are also important drivers of foreign trade through increased exports of plant
and machinery and goods and services from India and also a source of foreign exchange earnings by
way of dividend earnings, royalty, technical know-how fee and other entitlements on such
investments.
Section 6 of the Foreign Exchange Management Act, 1999 provides powers to the Reserve Bank
to specify, in consultation with the Government of India the classes of permissible capital account
transactions and limits up to which foreign exchange is admissible for such transactions. Section
6(3) of the aforesaid Act provides powers to the Reserve Bank to prohibit, restrict or regulate
various transactions referred to in the sub-clauses of that sub-section, by making Regulations.
Accordingly Foreign Exchange Management (Transfer or Issue of any Foreign Security)
Regulations, 2004 vide Notification No. FEMA.120/RB-2004 dated July 7, 2004 was notified which
seeks to regulate acquisition and transfer of a foreign security by a person resident in India i.e.
investment by Indian entities in overseas joint ventures and wholly owned subsidiaries as also
investment by a person resident in India in shares and securities issued outside India.
Method of Funding
1. Investment in an overseas JV / WOS may be funded out of one or more of the following
sources:
i. drawal of foreign exchange from an AD bank in India;
ii. capitalisation of exports;
iii. swap of shares [valuation as mentioned in para B.1 (e)];
iv. proceeds of External Commercial Borrowings (ECBs) / Foreign Currency
Convertible Bonds (FCCBs);
v. in exchange of ADRs/GDRs issued in accordance with the Scheme for issue of
Foreign Currency Convertible Bonds and Ordinary Shares (through Depository
Receipt Mechanism) Scheme, 1993, and the guidelines issued thereunder from time
to time by the Government of India;
vi. balances held in EEFC account of the Indian party and

vii. proceeds of foreign currency funds raised through ADR / GDR issues.
In respect of (vi) and (vii) above, the limit of financial commitment vis-à-vis the net worth
will not apply. However, all investments made in the financial sector will be subject to
compliance with Regulation 7 of the Notification, irrespective of the method of funding.
General Permission
2. General permission has been granted to persons resident in India for purchase / acquisition
of securities in the following manner:
(i) out of funds held in RFC account;
(ii) as bonus shares on existing holding of foreign currency shares; and
(iii) when not permanently resident in India, out of their foreign currency resources
outside India
Overseas Investment can be made under two routes viz. Automatic Route and Approval
Route
Prohibitions
Indian parties are prohibited from making investment in a foreign entity engaged in real estate
(meaning buying and selling of real estate or trading in Transferable Development Rights (TDRs)
but does not include development of townships, construction of residential/commercial premises,
roads or bridges) or banking business, without the prior approval of the Reserve Bank.
An overseas entity, having direct or indirect equity participation by an Indian party, shall not
offer financial products linked to Indian Rupee (e.g. non-deliverable trades involving foreign
currency, rupee exchange rates, stock indices linked to Indian market, etc.) without the specific
approval of the Reserve Bank. Any incidence of such product facilitation would be treated as a
contravention of the extant FEMA regulations and would consequently attract action under the
relevant provisions of FEMA, 1999.
A master circular on Overseas Direct Investment was issued by RBI on July 03, 2014and was
updated upto January 22, 2015, which is available at www.rbi.org.in.
Check list - Direct Investment outside India – Automatic Route
Sl. No. Particulars
1 Check whether the investment (total financial commitment) in

overseas Joint Ventures/Wholly Owned Subsidiaries(WOS) does
not exceed 400% of the networth as on the date of last audited
Balance Sheet of Indian Party
Also, ensure that prior approval of the Reserve Bank is obtained

for any financial commitment exceeding USD 1 (one) billion (or
its equivalent) in a financial year, even when the total FC of the
Indian Party is within the eligible limit under the automatic
route (i.e., within 400% of the net worth as per the last audited
balance sheet)
It may be noted that the total financial commitment of the Indian

party in all the Joint Ventures / Wholly Owned Subsidiaries shall
comprise of the following:
a. 100% of the amount of equity shares;
b. 100% of the amount of compulsorily and mandatorily
convertible preference shares;
c. 100% of the amount of other preference shares;
d. 100% of the amount of loan;
e. 100% of the amount of guarantee (other than performance
guarantee) issued by the Indian party;
f. 100% of the amount of bank guarantee issued by a
resident bank on behalf of JV or WOS of the Indian party
provided the bank guarantee is backed by a counter
guarantee / collateral by the Indian party;
g. 50% of the amount of performance guarantee issued by
the Indian party provided that the outflow on account of
invocation of performance guarantee results in the breach
of the limit of the financial commitment in force, prior
permission of the Reserve Bank is to be obtained before
executing remittance beyond the limit prescribed for the
financial commitment.
2 Check whether the Indian entity has extended loan or guarantee

if any only to overseas JV/WOS in which it has equity
participation ?
3 Ensure that the Indian party is not in RBI’s Exporters caution

list/list of defaulters.
4 Ensure that all transactions relating B.1 to JV/WOS is routed

through one branch of an authorised dealer bank to be
designated by Indian Party. Also check that subsequent
remittances are made only after receipt of Unique Identification
Number for the first remittance.
5 In case of partial/full acquisition of an existing foreign company,

where investment is more than USD 5 million, the valuation of
shares was made by Category I Merchant Banker/appropriate
regulatory authority in a host country and in other cases by a
chartered accountant.
6 Ensure that shares acquired in any in exchange of ADRs/GDRs

fulfils the criteria specified.
7 Ensure that investment if any, in Nepal is made only in Indian

Rupees.

8. Ensure that the reporting of ODI is made in form ODI within 30
days from the date of transaction.
9. Check whether the issue of guarantee by an Indian Party to

stepdown subsidiary of JV/WOS is as per the conditions
stipulated.
10. Ensure that the funding of ODI is as per the norms prescribed.
11. Ensure that the capitalisation of exports and other dues is as per
the conditions stipulated.
12. Ensure that additional conditionsfor B.5 financial services sectors

is fulfilled, if applicable.
13. Check whether the transfer of shares by resident to another

resident or non-resident as the case may be is subject to the
prescribed conditions.
14. Check whether the obligation of Indian party is fulfilled such as

reporting of remittances, Annual Performance Report.
Check list-Direct Investment outside India – Approval Route
Sl. No. Particulars
1 Check whether prior approval of Reserve Bank of India is

obtained in all cases which are not covered under the automatic
route. For this purpose, application together with necessary
documents should be submitted in Form ODI through their
Authorised Dealer Category – I banks.
2. Check whether
 An Indian Party creates charge, by way of pledge, on the
shares of Joint Venture (JV) or Wholly Owned Subsidiary
(WOS) or Step Down Subsidiary (SDS) outside India as a
security in favour of an Authorized Dealer or a public
financial institution in India or an overseas lender, for
availing of fund based or non-fund based facility for itself
(i.e. the Indian party) or for its JV / WOS / SDS whose shares
have been pledged, or for any other JV / WOS / SDS of the
Indian party subject to the terms and conditions prescribed.
 An Indian party creates charge (by way of mortgage,
pledge, hypothecation or otherwise) on its assets [including
the assets of its group company, sister concern or associate

company in India, promoter and / or director] in favour of
an overseas lender as security for availing of the fund based
and/or non-fund based facility for its Joint Venture (JV) or
Wholly Owned Subsidiary (WOS) or Step Down Subsidiary
(SDS) outside India subject to the terms and conditions
prescribed.
 An Indian party creates charge (by way of mortgage,
pledge, hypothecation or otherwise) on the assets of its
overseas JV or WOS or SDS in favour of an AD bank in India
as security for availing of the fund based and/or non-fund
based facility for itself or its JV or WOS or SDS outside India
subject to the terms and conditions prescribed.
3 Whether approval of RBI is obtained for issuance of corporate

guarantee on behalf of second generation or subsequent level
step down operating subsidiaries.
4 Check whether the investment by Indian Mutual funds registered

with SEBI is as per the norms
It may be noted that Indian Mutual Funds registered with SEBI
are permitted to invest within an overall cap of USD 7 billion in:
(i) ADRs / GDRs of the Indian and foreign companies;
(ii) equity of overseas companies listed on recognised stock
exchanges overseas ;
(iii) initial and follow on public offerings for listing at
recognized stock exchanges overseas;
(iv) foreign debt securities in the countries with fully
convertible currencies, short- term as well as long-term
debt instruments with rating not below investment
grade by accredited/registered credit agencies;
(v) money market instruments rated not below investment
grade;
(vi) repos in the form of investment, where the counterparty
is rated not below investment grade. The repos should
not, however, involve any borrowing of funds by mutual
funds;
(vii) government securities where the countries are rated not
below investment grade;
(viii) derivatives traded on recognized stock exchanges
overseasonly for hedging and portfolio balancing with
underlying as securities;
(ix) short-term deposits with banks overseas where the
issuer is rated not below investment grade; and
(x) units / securities issued by overseas Mutual Funds or

Unit Trusts registered with overseas regulators and
investing in (a) aforesaid securities, (b) Real Estate
Investment Trusts (REITS) listed on recognized stock
exchanges overseas, or (c) unlisted overseas securities
(not exceeding 10 per cent of their net assets).
5 Check whether Domestic Venture Capital Funds / Alternative

Investment Funds registered with SEBI invest in equity and
equity linked instruments of off-shore Venture Capital
Undertakings, subject to an overall limit of USD 500 million
6 Check whether FIPB approval is obtained if the investment is by

share swaps.
It may be noted that In the case of investment by way of share
swap, AD Category – I banks are additionally required to submit
to the Reserve Bank the details of transactions such as number of
shares received / allotted, premium paid / received, brokerage
paid / received, etc., and also confirmation to the effect that the
inward leg of transaction has been approved by FIPB and the
valuation has been done as per the laid-down procedure and that
the overseas company’s shares are issued / transferred in the
name of the Indian investing company. AD Category – I bank may
also obtain an undertaking from the applicants to the effect that
future sale / transfer of shares so acquired by Non-Residents in
the Indian company shall be in accordance with the prescribed
regulations.
7 Check whether the Indian party which has made direct

investment abroad (a) receives share certificate or any other
document as an evidence of investment, (b) repatriates to India
the dues receivable from foreign entity, and (c) submit the
documents / Annual Performance Report to the Reserve Bank, in
accordance with the provisions prescribed.
***

6
EXTERNAL COMMERCIAL BORROWING
Overseas ECBs refer to commercial loans in the form of bank loans, securitized instruments (e.g.
floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially
convertible preference shares), buyers’ credit, suppliers’ credit availed of from non-resident
lenders with a minimum average maturity of 3 years.
Foreign Currency Convertible Bonds (FCCBs) : FCCBs mean a bond issued by an Indian
company expressed in foreign currency, and the principal and interest in respect of which is
payable in foreign currency. The bonds are required to be issued in accordance with the scheme
viz., "Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depositary
Receipt Mechanism) Scheme, 1993”, and subscribed by a non-resident in foreign currency and
convertible into ordinary shares of the issuing company in any manner, either in whole, or in part,
on the basis of any equity related warrants attached to debt instruments. The ECB policy is
applicable to FCCBs. The issue of FCCBs is also required to adhere to the provisions of Notification
FEMA No. 120/RB-2004 dated July 7, 2004, as amended from time to time.
Preference shares : Preferences Shares (i.e. non-convertible, optionally convertible or partially
convertible) for issue of which, funds have been received on or after May 1, 2007 would be
considered as debt and should conform to the ECB policy. Accordingly, all the norms applicable for
ECB, viz. eligible borrowers, recognized lenders, amount and maturity, end use stipulations, etc.
shall apply. Since these instruments would be denominated in Rupees, the rupee interest rate will
be based on the swap equivalent of LIBOR plus the spread as permissible for ECBs of corresponding
maturity.
Foreign Currency Exchangeable Bonds (FCEBs) : FCEBs means a bond expressed in foreign
currency, the principal and interest in respect of which is payable in foreign currency, issued by an
Issuing Company and subscribed to by a person who is a resident outside India, in foreign currency
and exchangeable into equity share of another company, to be called the Offered Company, in any
manner, either wholly, or partly or on the basis of any equity related warrants attached to debt
instruments. The FCEBs must comply with the “Issue of Foreign Currency Exchangeable Bonds
(FCEB) Scheme, 2008”, notified by the Government of India, Ministry of Finance, Department of
Economic Affairs vide Notification G.S.R.89(E) dated February 15, 2008. The guidelines, rules, etc.
governing ECBs are also applicable to FCEBs.
ECB can be accessed under two routes, viz., (i) Automatic Route and (ii) Approval Route.
ECB for investment in real sector-industrial sector, infrastructure sector and specified service
sectors in India as indicated under para I (A) (i) (a) are under the Automatic Route, i.e. do not
require Reserve Bank / Government of India approval. In case of doubt as regards eligibility to
access the Automatic Route, applicants may take recourse to the Approval Route. It is clarified that
eligibility for an ECB in respect of eligible borrowers, recognised lenders, end-uses, etc. have to be
read in conjunction and not in isolation.
The master circular on External Commercial Borrowings and Trade Credits was issued on July
1st 2014, updated upto January 23, 2015which is available at www.rbi.org.

Checklist on External Commercial Borrowing
Automatic Route
Sl. No. Particulars
1 Check the Eligibility of borrower; whether the borrower

obtained Loan Registration Number by submitting form 83 to
RBI.
2 Check the recognition of lender.
3 Check whether the maximum amount of ECB by a corporate

other than those in the hotel, hospital and software and
corporate in miscellaneous services sectors is within USD 750
million or its equivalent during a financial year.
4 Check whether ECB by Corporates in the services sector viz.

hotels, hospitals and software and corporate in miscellaneous
services sector is not more than USD 200 million or its
equivalent in a financial year. The proceeds of the ECBs should
not be used for acquisition of land.
5 Check whether NGOs engaged in micro finance activities and

Micro Finance Institutions (MFIs) raises ECB not more than
USD 10 million or its equivalent during a financial year.
6 Check whether NBFC-Infrastructure Finance Companies avail of

ECB up to 75 per cent of their owned funds (ECB including
outstanding ECBs) and hedge 75 per cent of their currency risk
exposure.
7 Check whether NBFC - Asset Finance Companies avail of

ECBs up to 75 per cent of their owned funds (ECB including
outstanding ECBs) subject to a maximum of USD 200 million or
its equivalent per financial year with a minimum maturity of 5
years and must hedge the currency risk exposure in full.
8 Check whether SIDBI avail of ECB to the extent of 50 per cent

of their owned funds including the outstanding ECB, subject to a
ceiling of USD 500 million per financial year.
9 Check whether ECB up to USD 20 million or its equivalent in a

financial year with minimum average maturity of three years.
10. Check whether ECB above USD 20 million or equivalent and up

to USD 750 million or its equivalent with a minimum average
maturity of five years.

11. Check whether ECB up to USD 20 million or equivalent having
call/put option provided the minimum average maturity of three
years is complied with before exercising call/put option.
12 Check the permitted End use requirements
13 Check ECB proceeds parked overseas is invested in the

permitted liquid assets.
14 Check the Prepayment of ECB is up to USD 500 million and in

compliance with the stipulated minimum average maturity
period as applicable to the loan.
15 Check whether the existing ECB is refinanced by raising a

fresh ECB subject to the condition that the fresh ECB is raised at
a lower all-in-cost and the outstanding maturity of the original
ECB is maintained.
16 Check All in Cost Ceiling prescribed.
17 Check if ECB has been drawn down only after receipt of Loan
Registration Number from the Reserve Bank of India.
18 Check if ECB-2 Return is filed every month on or before 7th of

every month from receipt of LRN from RBI, till such time that
ECB subsists.
***

7
SECRETARIAL STANDARDS UNDER
COMPANIES ACT, 2013
Introduction and Need
It was observed that companies follow diverse secretarial practices while following the
provisions of company law. Therefore, a need emerged to integrate, harmonise and standardise
such practices so as to promote uniformity and consistency in corporate practices.
Recognising this need for integration, harmonisation and standardisation of diverse secretarial
practices, the Institute of Company Secretaries of India, (ICSI), constituted the Secretarial Standards
Board (SSB) in the year 2000 with the objective of formulating Secretarial Standards.
So far, the ICSI had issued ten Secretarial Standards under the Companies Act, 1956, viz.
SS-1 : Secretarial Standard on Meetings of the Board of Directors
SS-2 : Secretarial Standard on General Meetings
SS-3 : Secretarial Standard on Dividend
SS-4 : Secretarial Standard on Registers and Records
SS-5 : Secretarial Standard on Minutes
SS-6 : Secretarial Standard on Transmission of Shares and Debentures
SS-7 : Secretarial Standard on Passing of Resolutions by Circulation
SS-8 : Secretarial Standard on Affixing of Common Seal
SS-9 : Secretarial Standard on Forfeiture of Shares and
SS-10 : Secretarial Standard on Board’s Report.
Secretarial Standards and the Companies Act, 2013
The Companies Act, 2013 has recognised the need for every company to observe Secretarial
Standards.
The term ‘Secretarial Standard’ is defined as an explanation to section 205 of the Companies
Act, 2013 to mean secretarial standards issued by the Institute of Company Secretaries of India
constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central
Government.
Section 118 (10) of the Companies Act, 2013 requires every company to observe secretarial
standards with respect to General and Board meetings.
Also, as per section 205(1)(b), it is the duty of the company secretary to ensure that the
company complies with the applicable secretarial standards.
Adherence to these Secretarial Standards is thus mandatory once these are issued by the
Institute of Company Secretaries of India and approved by the Central Government.

To begin with, the Secretarial Standards Board of the Institute has finalized drafts of the
following Secretarial Standards in the light of the provisions of the Companies Act, 2013:
• SS-1: Meetings of the Board of Directors
• SS-2: Secretarial Standard on General Meetings
After these are approved by the Central Government, it would be mandatory for the companies
to observe the same.
Secretarial Standards Board (SSB) and Secretarial Standards
The SSB identifies the areas in which Secretarial Standards need to be issued. Once areas are
identified, the standards are formulated by the Board which constitutes eminent professionals from
the industry, nominees of professional bodies, regulators and industry associations.
These are prepared taking into consideration, the applicable laws, business environment and
best secretarial practices.
SSB also clarifies the issues arising out of such Standards and issues guidance notes for the
benefit of members of ICSI, the corporate sector and other users.
Secretarial Standards are prepared in conformity with the provisions of the applicable laws.
However, if, due to subsequent changes in the Act, a particular Standard or any part thereof
becomes inconsistent with the Act, the provisions of the Act shall prevail.
The Secretarial Standards issued by the ICSI generally contain the following:
(a) set of principles relating to the subject of the Standard.
(b) Definitions and Explanations of terms used in the Standard.
(c) Scope of the standard.
(d) The standard.
(e) Date from which the standard would be effective.
(f) Annexures
It is the beginning of a new era where non financial standards have been given due importance
and statutory recognition.
***

2
8
LABOUR LAWS
(General Laws)
Introduction
The prosperity of any economy largely depends on industry. There can be no labour without
activity of industrial nature. The industrial law covers a spectrum of activities like manufacturing,
trading, transporting, exporting, importing, storing, polishing, packaging etc. It also covers
conditions of labour including wages, deductions against Provident Fund, ESI, employment of
contractual labour etc. Labour laws focus its attention more on work aspects and the consequent
remuneration whereas industrial law aims at the origin, growth and regulation of industries,
employing specified number of workers including women and children. Labour legislations are
aimed at achieving congenial relationship between employer and workmen.
Two basic features of labour legislations are :
(i) It aims at the establishment of amicable relationship between a worker and employer.
(ii) It emphasizes that both management and labour belong to a single family and should
endeavour to improve the standard of living of the workers, giving room for labour
harmony.
The relationship between labour and management is based on mutual adjustment of interests
and goals. It depends on economic, social and psychological satisfaction of the parties. Higher the
satisfaction, healthier the relationship.
The Directives Principles of State Policy under Article 38 of our Constitution require the State to
bestow social security on all. The entire labour legislation originates from the Directive Principles
of the State Policy. Legislations providing inter-alia minimum wages, safeguarding' prompt
payment of wages without deductions, ensuring benefit during period of sickness, assuring
legitimate share in the profit of the management, preventing exploitation of the workers and above
all promoting better relations by joint participation of the workers in the management were all
formulated with a view to improving the standard of living of the workers.
Need for Labour Laws Compliance
Business enterprises employing personnel, both in the executive cadre as also those categorized
as workers in the context of labour laws are required to be fully aware of these laws. Further,
considering the number and complexity of the labour laws, there is a need for monitoring
compliance of such laws on a regular basis.
Scope of Labour Laws Compliance
Labour laws compliance is a unique concept and differs from other compliance/audits in the
country. Focus of all other audits is on financial implications on company/business entity, with
little consideration of human values. In terms of decision of ICSI Council on the scope of Secretarial
Audit, it includes examining and reporting on whether the adequate systems and processes are in

place to monitor and ensure compliance with general laws like labour laws, competition law,
environmental laws etc.
Benefits of Labour Laws Compliance
The compliance of labour laws would benefit employees in terms of increased social security,
lower absenteeism and congenial atmosphere. It helps to detect non-compliance of various labour
laws applicable to an organization and to take corrective measures. The employer would gain in
terms of lower penalty, higher productivity and increased belongingness. Directors of companies
will be relieved of penalties and prosecutions. At the same time the compliance mechanism would
help the Government in ensuring that the workers have not been deprived of benefits to which they
are entitled, thus providing a net for social security.
To ensure existence of adequate systems and processes in the company, indicative list of
Central legislations together with the compliance requirements is presented in this chapter. In
addition, there may also be Local State Labour laws which are applicable to company.
Sl. No. Name of the Act
1. Factories Act, 1948
2. Industrial Disputes Act, 1947
3. The Payment of Wages Act, 1936
4. The Minimum Wages Act, 1948
5. Employees’ State Insurance Act, 1948
6. The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
7. The Payment of Bonus Act, 1965
8. The Payment of Gratuity Act, 1972
9. The Contract Labour (Regulation & Abolition) Act, 1970
10. The Maternity Benefit Act, 1961
11. The Child Labour (Prohibition & Regulation) Act, 1986
12. The Industrial Employment (Standing Order) Act, 1946
13. The Employees’ Compensation Act, 1923
14. The Apprentices Act, 1961
15. Equal Remuneration Act, 1976
16. The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959

CHECKLIST (S)
Factories Act, 1948
1. The Factories Act, 1948 is applicable to the company.
2. The occupier has atleast fifteen days before occupying

or using any premises as a factory, sent to the Chief
Inspector a written notice as contained in section 7.
3. The company has renewed the licence on an yearly

basis within 2 months from the expiry of the licence as
contained under Section 7.
4. The provisions regarding registration / licence as

prescribed in section 6 have been complied with.
5. The employer has appointed the manager/ occupier of

the factory under the Act and sent notice to the
competent authority.
6. The company has complied with:
(i) health measures as provided in chapter III;
(ii) safety measures as provided in chapter IV;
(iii) applicable provisions of chapter IV-A;
(iv) welfare measures as provided in chapter V;
(v) working hours of adults as provided in

chapter VI;
(vi) employment of Young Persons as provided

in chapter VII; and
(vii) annual leave with wages as provided in

chapter VIII.

Date: Date:

Industrial Disputes Act, 1947
1. The Industrial Disputes Act, 1947 is applicable to the

company.
2. There is an industrial dispute, as defined under Section
2-A of the Act.
3. The company has maintained a muster roll as required
under section 25-D of the Act.
4. The Company is an industrial establishment, having one
hundred or more workmen. If yes, the company has
constituted Works Committee as required under
Section 3 of the Act.
5. Any change in the conditions of service applicable to
any workman in respect of any matter specified in the
fourth schedule of the Act, has been made after giving
21 days notice to the workmen, of such intention in
Form E, as required under Section 9-A of the Act, read
with Rule 34.
6. The company has twenty or more workmen.
If yes, the company has constituted Grievance Redressal
Committee as required under Section 9-C of the Act.
7. The Company is a Public Utility Service. If yes, the lock-
out if any has been carried out after giving sufficient
notice in Form N, as required under Section 22(3) of the
Act read with rule 73.
8. The Company has complied with the conditions
precedent to the retrenchment of workmen, as required
under Section 25-F and Section 25-N, as applicable.
9. The Company maintains a muster roll for its workmen
as required under Section 25-D.
10. The Company has compensated for being laid off, the
workmen, whose name is in the muster rolls and has
completed not less than one year of continuous
service.(Rule 25C)
11. The company has compensated the workmen in
case of closing down of undertakings, as prescribed in
section 25-FFF.
Date: Date:

The Payment of Wages Act, 1936
1. The Payment of Wages Act, 1936 is applicable to the

company.
2. The payment of wages is made before:
(a) before the expiry of the 7th day of the following

month, when less than 1000 persons are
employed.
(b) before the expiry of the 10th day of the

following month, when more than 1000 workers
are employed.
3. The deductions made from the wages of the employee

are in accordance with section 7 of the Act.
4. Any deduction has been made on account of damage or

loss.
5. If any deduction has been made on account of damage

or loss, show cause notice has been given to the
employee.
6. In case any deduction has been made for unauthorized

absence, opportunity of being heard is given.
7. The registers and records giving particulars of persons

employed, the work performed by them, the wages paid
to them, the deductions made from their wages and the
receipts given by them are maintained and preserved
for a period of 3 years or more.
8. The employer has displayed the abstract of the Act and

Rules made thereunder in the manner prescribed under
section 25.

Date: Date:

The Minimum Wages Act, 1948
1. The Minimum Wages Act, 1948 is applicable to the

Company.
2. The company has been paying the minimum wages as

notified from time to time by the appropriate
Government under the Act.
3. The company has paid wages in cash. If not, the wages

in kind has been paid after following the procedure
prescribed under section 11 of the Act.
4. The company follows the conditions prescribed with

regard to working hours, working day under section 13
of the Act.
5. The company has paid overtime rate as prescribed

under section 14 of the Act read with rule 25.
6. The company has maintained all registers and records

that are required to be maintained under section 18 of
the Act and rule 26.
7. The company has followed the procedure prescribed

with respect to payment of undisbursed amounts due to
employees, for reasons such as death, whereabouts not
known etc.
8. The company has followed the procedure prescribed in

rule 21 with respect to deductions made from the
wages.
9. The company has followed time and conditions of

payments of wages prescribed in rule 21.
10. Notices in Form No. IX-A, containing the minimum

rate of wages has been displayed at the main entrance
to the establishment, as specified in rule 22.

Date: Date:

Employees' State Insurance Act, 1948
1. The Employees' State Insurance Act, 1948 is applicable

to the company.
2. The factory or establishment to which the Act applies

has been registered.
3. The rate of contribution of the employer and employee

is in accordance with the Act. [Rule 51 of ESI (Central)
Rules, 1950.]
4. The manner and time Limit for making payment of

contribution is in accordance with the Act.
5. The employer has maintained the register of employees

in Form No. 6.
6. Submission of returns/reports:
(i) Annual return in Form No. 01-A;
(ii) Return of contributions in Form No. 5;
(iii) Report of accident in Form No. 12;
(iv) Report of death of insured persons.
7. The benefits provided in Chapter V of the Act were

made available to the applicable employee.

Date: Date:
The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952
1. The Employees’ Provident Fund and Miscellaneous

Provisions Act, 1952 is applicable to the company.
2. The contributions made by the employer and the

employee and payment thereof are in accordance with
para 29 and 30 of the Employees’ Provident Funds
Scheme, 1952.
3. The employer has obtained declarations from the

persons taking up the employment. (Para 34 of the
scheme)

4. The employer has prepared the contribution card in
Form No. 3 or 3-A as appropriate in respect of every
employee in his employment.
5. The employer has sent to the Commissioner:

a) Consolidated return in the form specified by
the commissioner.
b) Monthly return in Form No. 5 together with
declaration in Form No. 2.
c) In such form as the commissioner may
specify of employees leaving service of the
employer during the preceding month.
d) Inspection note book in such form as the
commissioner may specify, is maintained.
e) Accounts relating to amount contributed to
the fund by the employer and by the
employee have been maintained.
(Para 36 of scheme)
6. The employer has furnished particulars of ownership

in Form No. 5-A to the Regional Commissioner.(Para 36
A of scheme)
7. The employer has forwarded the monthly abstract to

the commissioner. [Para 38 (2) of scheme]
8. Consolidated annual contribution statement in Form No.

6-A was sent to the commissioner. [Para 38(3) of
scheme]
9. Submission of contribution card to the commissioner

with a statement in Form No. 6.
10. Any proceedings under the Act have been initiated

against the Directors for recovery of dues.
11. If the Employer has created its own trust, whether the
terms of trust are more beneficial than those provided
under the trust.
12. The conditions imposed by PF Commissioner for the

creation of Trust are satisfied.
13. The provisions relating to Employees’ Pension

Scheme, 1995 have been complied with.
14. The provisions relating to Employees' Deposit Linked

Insurance Scheme, 1976 have been complied with.
Date: Date:

The Payment of Bonus Act, 1965
1. The Payment of Bonus Act, 1965 is applicable to the

company.
2. Computation of available surplus, allocable surplus and

bonus are correctly arrived at.
3. Any amount has been deducted from bonus and if so,

whether they are in accordance with the provisions of
section 18.
4. Bonus is paid to the eligible employees.
5. The minimum or maximum amount of bonus paid is in

accordance with section 10 or section 11, as the case
may be.
6. The company has paid bonus to the employee:
(a) Where there is a dispute regarding

payment of bonus pending before any
authority under section 22- within a
month from the date on which the award
becomes enforceable or the settlement
comes into operation, in respect of such
dispute;
(b) In any other case-within a period of eight

months from the close of the accounting
year.
7. The company has maintained the registers as provided

in rule 4.
8. The company has submitted the annual return of

payment of bonus to the Inspector in Form No. D within
thirty days after the expiry of the time limit prescribed
in section 19.

Date: Date:

The Payment of Gratuity Act, 1972
1. The Payment of Gratuity Act, 1972 is applicable to

the company.
2. There are employees who have worked for a continuous

period of 5 years or more.
3. Any gratuity has been paid to any employee. If yes,

whether it has been paid within 30 days.
4. The employer has displayed a notice as provided in

rule 4, specifying the name of the officer with
designation who is authorised to receive notice under
the Act or the rules made thereunder.
5. The employer has complied with the provisions related
to nominations as specified in rule 6.
6. Gratuity of any employee has been forfeited. If yes,
whether an opportunity of being heard is given?
7. The gratuity has been forfeited for the reasons as
specified in the Act.
8. The employer has displayed the abstract of the Act and
rules made thereunder at or near the main entrance of
the establishment, as specified in rule 20.
9. The employer has obtained insurance for liability of
payment of gratuity as specified in section 4A of the Act.
Date: Date:
The Contract Labour (Regulation and Abolition) Act, 1970
1. The Contract Labour (Regulation and Abolition) Act,

1970 is applicable to the company.
2. The principal employer has obtained the certificate of

registration for the establishment.
3. The appropriate Government has by a notification

prohibited the employment of contract labour under
section 10.

4. The contractors have obtained license from the
Licensing Authority for contract labour undertaken or
executed by them.
5. The contractors have got their license renewed in

time.
6. The contractors are employing workmen as per license

and registration certificate.
7. The number of workmen actually employed by the

contractors tallies with the number of workmen shown
in the license.
8. The contractors are sending half-yearly returns in

Form No. XXIV in time.
9. Where the wage period is one week or more, the

contractors are issuing wages slips in Form No. XIX one
day prior to the disbursement of wages.
10. The principal employer maintains register of

contractors in Form No. XII.
11. The principal employer has sent annual return in Form

No. XXV to the Registering Officer.
12. The principal employer has within fifteen days of

commencement or completion of each contract,
submitted return in Form No. VI-B to the Inspector.
13. Minimum rate of wages are being paid to the contractor

labour in the presence of authorized representative of
the principal employer.
14. The authorized representative of the principal

employer gives a certificate to this effect at the end of
the entries in the register of wage- cum- Muster Roll, as
the case may be.
15. The contractors are properly depositing ESI, EPF

contributions in respect of their workmen and
submitting copies of the challan to the HR Department
of the company.
16. The contract labour is provided the facility of rest room,

canteen, wash room, first aid and other facilities.

17. The contract labour is granted leave with wages.
18. The contract labour is being paid over time at double

rate.
19. The workmen engaged by the contractor are ensured

benefits from ESI Scheme including issue of cards,
temporary slips and are provided medical facilities.
20. The contract labour is being given contribution

slips of EPF issued by the Regional Provident
Commissioner.
21. The payment of wages to contract labour is being made

in accordance with rule 65.
22. The leave applications and gate passes of the contract

labour are being signed by the contractor and his agent.
23. The gate passes to the contract Labour are issued and
signed by the company’s employees.
24. The contractors are maintaining records as provided in

rule 78.

Date: Date:
The Maternity Benefit Act, 1961
1. The Maternity Benefit Act, 1961 is applicable to the

company.
2. The employer has knowingly employed a woman in
any establishment during the six weeks immediately
following the day of her delivery, miscarriage or medical
termination of her pregnancy.
3. Any pregnant woman has made any request not to give
her any work which is of an arduous nature or which
involves long hours of standing, etc. during the period of
one month immediately preceding the period of six
weeks, before the date of her expected delivery.
4. Any woman employee is entitled for maternity
benefit, medical bonus and nursing break and if yes,
whether payment has been made and nursing break
was allowed in accordance with the Act.

5. The employer exhibited the abstract of the provisions of
the Act and the rules made thereunder in accordance
with section 19 of the Act.
6. Whether the employer has maintained muster rolls,

registers and records as prescribed, if any, by the
appropriate Government.
7. Whether the employer has submitted annual return in

the form prescribed, if any, by the appropriate
Government.

Date: Date:
The Child Labour (Prohibition and Regulation) Act, 1986
1. The Child Labour (Prohibition and Regulation) Act,

1986 is applicable to the company.
2. The occupier has sent notice to Inspector as per section
9 when a child is employed or permitted to work.
3. The employer has employed any child labour in
occupations set forth in Part-A or Process set forth in
Part-B of the Schedule to the Act.
4. The employer has maintained the register in Form No.
A in respect of children employed or permitted to work
as specified in section 11.
5. The occupier has displayed notice containing abstract of
sections 3 and 14 as specified in section 12.
Date: Date:
The Industrial Employment (Standing Orders) Act, 1946
1. The Industrial Employment (Standing Orders) Act, 1946

is applicable to the company.
2. One hundred/One hundred fifty* or more workmen

are employed, or were employed on any day of the
preceding twelve months.
*Karnataka & Maharashtra

3. The industrial establishment has submitted to the
Certifying Officer, five copies of the draft Standing
Orders proposed by it for adoption in the establishment.
4. The text of the Standing Orders as finally certified has

been prominently posted by the company in English and
in the language understood by the majority of workmen
on special boards to be maintained for the purpose.
5. The industrial establishment has modified the Standing

Orders on agreement between the employer and the
workmen or a trade union or other representative body
of the workmen.
6. Any workman was suspended by the industrial

establishment pending investigation or inquiry into
complaints or charges of misconduct.
7. The industrial establishment has paid any subsistence

allowance to any suspended employee.

Date: Date:
The Employees’ Compensation Act, 1923

(earlier known as Workmen’s Compensation Act, 1923)
1. The Employees’ Compensation Act, 1923 is applicable

to the company.
2. Any personal injury is caused to an employee by

an accident arising out of or in the course of
employment. If yes, the company has paid
compensation as prescribed under Section 4 of the Act.
3. The company has maintained notice book in its

premises, for reporting notice of accidents as prescribed
in Section 10(3) of the Act.
4. The company has reported of fatal accident or serious

bodily injuries in Form No. E-E to the Commissioner, as
prescribed in section 10-B read with Rule 11 of the
rules.
5. The company has deposited compensation with the

Commissioner in respect of the workman whose injury

has resulted in death and has furnished statement in
Form No. A, OR In other cases company shall furnish
statement in Form 'AA', as prescribed in section 8(1)
read with rule 6(1). (As Applicable)
6. The company has furnished a statement in Form 'D',

while depositing compensation, as required under
section 8(2) read with rule 9.
7. The company has sent a return as to compensation

paid during the previous year. (As specified by the State
Government in respective state law)
8. On settlement of compensation amount in between

company and workman, company executed a
memorandum of agreement with the workman in Form
No. K, L or M, as the case, may be and submitted such
agreement along with an application to register it to the
Commissioner, as prescribed in rule 48.

Date: Date:
The Apprentices Act, 1961
1. The Apprentices Act, 1961 is applicable to the company.
2. The age of apprentice is more than 14 years and for

designated trade related to hazardous Industries is
more than 18 years.
3. The apprentices are employed in designated trade.
4. The physical fitness of the apprentices is as per the

prescribed standard.
5. The working hours, overtime, leave and holidays of

apprentices are within the limit as prescribed in the Act.
6. Contract of apprenticeship has been entered into with

the apprentice.
7. Minimum stipend has been paid by the employer.
8. The register of attendance of apprentices undergoing

apprentice training is maintained by the employer.

9. The provisions for reservation of apprentice training
places for SC/ST/OBC have been made in designated
trades.
10. The contract of apprenticeship was sent by the

employer to the apprenticeship advisor/entered on the
port-site within 7 days for verification & registration.

Date: Date:
Equal Remuneration Act, 1976
1. Equal Remuneration Act, 1976 is applicable to the

Company.
2. Payment of equal remuneration has been made to all

for same work or work of similar nature and there is no
discrimination between men and women while
recruiting or subsequent to recruitment, promotion etc.
(As per Section 4 read with section 5)
3. The company has maintained register in relation to

workers in Form No. D as required under rule 6.

Date: Date:
The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
1. The Employment Exchange (Compulsory Notification

of Vacancies) Act, 1959 is applicable to the company.
2. The company has notified the vacancies to employment
exchanges, as prescribed in section 4 of the Act read
with rule 5.
3. The company has furnished quarterly returns in Form
No. ER-1, biennial return in Form No.ER-II to local
employment exchange as prescribed in rule 6.

Date: Date:
***

2
9
COMPETITION LAW
(General Laws)
Introduction
Competition/Anti-trust issues in India are governed by the Competition Act, 2002 (“the Act”).
Amongst other things, the Act provides a general legal framework prohibiting anti-competitive
agreements, abuse of dominant position and regulating certain combinations.
To implement the Act, the Competition Commission of India (“CCI”) has been established. In
addition, the Act also gives the CCI the responsibility of undertaking competition advocacy. Under
the Act, CCI has also been explicitly empowered to exercise jurisdiction in relation to acts taking
place outside India but having an effect on competition in India. The Act also provides for
establishment of the Competition Appellate Tribunal (“COMPAT”) to hear and dispose of appeals
against directions, decisions and orders passed by the CCI and to adjudicate on claims for
compensation in certain cases. Further, the Act, provides for appeal against any decision or order of
the COMPAT to the Supreme Court of India.
Applicability
The Act, not only applies to the private and public sector but also includes entrepreneur
associations and Government departments (except activities relating to the sovereign functions of
the Government and those relating to atomic energy, currency, defence and space). Further, the Act
applies not only to activities in India, but also to activities outside of India that affect competition
within India. Hence, all businesses (large and small) are covered by the Act.
Competition Law Compliance
It is important to note that the Act operates on a “self-assessment” basis, meaning that
businesses must determine for themselves whether its agreement, conduct, M&A transaction will
be lawful or could breach the provisions of the Act particularly in view of the fact that there are no
block exemptions, market share based test to evaluate anti-competitive conduct as prevalent in
other matured jurisdictions such as European Union. In this context, it is for businesses to carry out
self assessment of their business practices and take steps to ensure that their practices, business
contracts and dealings etc. comply with the provisions of the Act.
Anti Competitive Agreements
Following general checklist may be followed while carrying out assessment of agreements
including horizontal and vertical agreements such as tie-in arrangements, exclusive supply
agreement, exclusive distribution agreement, refusal to deal, resale price maintenance from
competition law compliance perspective:
— Determine whether enterprise or association of enterprises or person or association of
persons have entered into any agreement in respect of production, supply, distribution,
storage, acquisition or control of goods or provision of services.
— Determine what are pro-competitive effects and anti-competitive effects produced by the
restriction imposed in the agreement in terms of section 19 (3) of the Act i.e. factors to be
considered for determining appreciable adverse effect on competition.
— Assess whether the pro-competitive effects outweigh the anti-competitive effects.

CHECKLIST FOR ANTI-COMPETITIVE AGREEMENTS
(inclusive check-list)
While Dealing with Competitors (Horizontal Agreements)
1. The company has not jointly determined selling or purchase

prices.
2. The company has not jointly agreed on rebates, discounts.
3. The company has not acted on circulars/notices/letters etc. of a

trade association in relation to price.
4. The company has not indulged in collective price-fixing or price

co-ordination of any product.
5. The company has not shared information about prices,

discounts, profit margins, cost structures, during meetings of a
trade association.
6. The company has not mutually agreed not to supply certain

customers or not to purchase from certain suppliers.
7. The company has not agreed with competitors to make the

supply or purchase of goods subject to certain mutually agreed
conditions.
8. The company has not shared or allocated markets between

competitors in respect of specific territories, products,
customers or sources of supply.
9. The company has not fixed production, buying and selling quotas
between competitors.
10. The company has not made a statement indicating advance

knowledge of the offers of the competitors.
11. The company has not given a false impression that the
enterprise is a party to any anti-competitive agreement.
12. The company has not discussed among competitors of such

matters as need for changes in price levels, prospective
production plans, allocation of markets, action aimed at
hindering the prospects of competitors, or the like.
13. The company has not agreed in writing or in any other way on
prices or pricing policy.

14. The company has not restricted the liberty of competitors to
promote and sell products at independently determined prices
and conditions.
15. The company has not agreed to adopt the same price list.
16. The company has not discussed future prices, price changes, or
price formulas.
17. The company has not discussed terms and conditions of

business.
18. The company has not discussed marketing programmes or

allowances.
19. The company has not shared or partitioned markets or

customers.
20. The company has not agreed to limit output or investment.
21. The company has not discussed or exchanged confidential

business information.
While Bidding in a Tender
22. The company has not agreed to submit identical bids
23. The company has not agreed as to who shall submit the lowest
bid, agreements for the submission of cover bids (voluntarily
inflated bids).
24. The company has not agreed not to bid against each other.
25. The company has not agreed on common norms to calculate

prices or terms of bids.
26. The company has not agreed to squeeze out outside bidders.
27. The company has not agreed on designating bid winners in

advance on a rotational basis, or on a geographical or customer
allocation basis.
28. The company has not brought multiple bids to a bid opening and
submits its bid only after coming to know as to who else is
bidding.
29. The company has not made a statement that a bid is a

'complementary', 'token 'or' cover' bid.

30. The company has not made a statement that the bidders have
discussed prices and reached an understanding.
31. The company has not agreed as to the bids which any of the
parties may offer at an auction for the sale of goods or any
agreement through which any party agrees to abstain from
bidding for any auction for the sale of goods or any agreement
through which any party agrees to abstain from bidding for any
auction for the sale of goods, which eliminates or distorts
competition.
While Written Communications
32. The company has not used ambiguous or misleading language

that may convey suspicious anti- competitive conduct such as
“please destroy or delete after reading”, “no copies to be made”,
“the main purpose of this transaction/conduct is to oust
competitor”.
33. The company has not used phrases that suggest that
competitors/distributors will follow price rise, stick to agreed
price.
34. The company has not used any expressions which are hyperbole
and slangs.

Date: Date:
ABUSE OF DOMINANCE
Following general checklist may be followed while carrying out assessment of abuse of
dominant position from competition law compliance perspective:
• Determine whether enterprise or group is dominant in a relevant market. In other words,

first determine relevant market in terms of section 19 (6) and (7) of the Act and
• Thereafter, determine whether the enterprise or group is in dominant position in the

defined relevant market in terms of section 19 (4) read with Explanation (a) to section 4 of
the Act.
• Once it is established that an enterprise or group is dominant in defined relevant market, it

must be ensured that the conduct/act of such enterprise or group does not fall under any
abuse of the type specified under section 4(2) (a) to (e) of the Act as the same will be
considered as abuse of dominant position.

CHECKLIST FOR ABUSE OF DOMINANCE (inclusive checklist)
1. The company has not imposed unfair or discriminatory

condition in purchase or sale. However, it may be noted that
unfair or discriminatory condition adopted to meet the
competition may not be abusive.
2. The company has not imposed unfair or discriminatory price

(including predatory price) in purchase or sale. However, unfair
or discriminatory price adopted to meet the competition may
not be abusive.
3. The company has not limited or restricted production of goods

or services or market.
4. The company has not limited or restricted technical or scientific

development relating to goods or services to the prejudice of
consumers.
5. The company has not indulged in practice or practices resulting

in denial of market access in any manner.
6. The company has not made conclusion of contracts subject to

acceptance by other parties of supplementary obligations which,
by their nature or according to commercial usage, have no
connection with the subject of such contracts.
7. The company has not used dominant position in one relevant

market to enter into, or protect, other relevant market.

Date: Date:
REGULATION OF COMBINATIONS
Following general checklist may be followed while carrying out assessment of combinations
from competition law compliance perspective at the earliest of deal/transaction negotiation
process:
 Check whether mergers, acquisitions and amalgamations (as the case may be) qualifies
as combination under the Act i.e. whether they are within the foot-print of Section 5

thresholds. These thresholds determine whether the proposed combination would
qualify as a “combination” and be then covered by the regulatory and operative
provisions of Section 6. The current thresholds appearing in Section 5 of the Act are as
follows:
Individual Group
Either the combined assets of the The group to which the enterprise
enterprises are more than Rs. 1,500 whose control, shares, assets or
crores in India or the combined voting rights are being acquired
turnover of the enterprise is more would belong after the acquisition or
than Rs. 4,500 crores in India. In case the group to which the enterprise
either or both of the enterprises have remaining the merger or
assets/ turnover outside India also, amalgamation would belong has
then the combined assets of the either assets of more than Rs. 6000
enterprises are more than US$ 750 crores in India or turnover more than
millions, including at least Rs. 750 Rs. 18000 crores in India. Where the
crores in India, or turnover is more group has presence in India as well as
than US$ 2250 millions, including at outside India then the group has
least Rs. 2,250 crores in India. assets more than US$ 3 billion
including at least Rs. 750 crores in
India or turnover more than US$ 9
billion including at least Rs. 2250
crores in India.
 Check whether mergers, acquisitions and amalgamations (as the case may be) falls
within any special exemptions provided therein, and unless exempted, the proposed
transaction will have to be notified to the CCI. In this regard, following may be noted:
1. Subject to certain requirements, a “combination” resulting from a

transaction involving share subscription, financing facility or acquisition by
a Public Financial Institution, Foreign Institutional Investor, Bank or Venture
Capital Fund is exempt from scrutiny by the CCI.
2. The Central Government has also issued notifications in March 2011

exempting certain transactions for a limited period of time i.e. till March
2016 (5 years), such as acquisition (of control, voting rights, shares or
assets) of an enterprise having assets of Rs. 250 crores or less or turnover of
Rs. 750 crores in India or less; combination by a Group exercising less than
50% of the voting rights in the other enterprise.
3. Regulation 4 of the Procedural Regulations clarify that since the categories

of combinations mentioned in Schedule I are ordinarily not likely to cause an
appreciable adverse effect on competition in India, notice under sub-section
(2) of section 6 of the Act need not normally be filed.

CHECKLIST – REGULATION OF COMBINATIONS
1. The transaction qualified as a “combination” under Section 5 of

the Act.
2. Mandatory notice to the CCI is filed, in case of merger or

amalgamation, within 30 days of approval of the proposal relating
to merger or amalgamation by the Board of directors of the
enterprises concerned.
3. Mandatory notice to the CCI is filed, in case of acquisition or

acquiring of control, within 30 days of execution of any agreement
or other document.
4. Notice was given to CCI is in terms of the Procedural Regulations

issued by CCI
5. Transaction has taken effect only after 210 days of such

mandatory notice to CCI or from the date the CCI passes an order
approving proposed combination whichever is earlier.
6. There is no premature pre-closing activity involving sharing of

competitively sensitive information or joint marketing,
production.
7. If, the transaction involves any substantive competition/antitrust

risk, the risk is allocated amongst the parties to the transaction.
Dated ……………. Dated …
***

10
ENVIRONMENTAL LAWS
(General Laws)
Introduction
India’s economic development propelled by rapid industrial growth and urbanization is causing
severe environmental problems that have local, regional and global significance. Recognising the
need for regulating the factors which are affecting environment, Government of India has
established an environmental legal and institutional system to meet these challenges within the
overall framework of India’s development agenda and international principles and norms.
Legal Framework
India has an elaborate legal framework with number of laws relating to environmental
protection. Key national laws include the following:
• Water (Prevention and Control of Pollution) Act, 1974;
• Water (Prevention and Control of Pollution) Cess Act, 1977;
• Air (Prevention and Control of Pollution) Act, 1981;
• Environment (Protection) Act, 1986;
• The Public Liability Insurance Act, 1991;
• The Biodiversity Act, 2002;
• The National Green Tribunal Act, 2010;
• Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008.
Checklists
The Environment (Protection) Act, 1986
[Read With The Environment (Protection) Rules, 1986]
Sl. No Particulars Compliance Remarks
1. The Company has received any direction from the

Central Government in writing for the closure,
prohibition or regulation of any industry, operation
or process; or stoppage or regulation of the supply
of electricity or water or any other service under
section 5 of the Act
2. The company compiled with the directions received

from Central Government under section 5 of the Act.
3. The Company does not discharge or emit or permit

to be discharged or emitted any environmental
pollutants in excess of such standards as specified
under section 7 of the Environment (Protection)
Act, 1986 read with rule 3A of the Environment
(Protection) Rules, 1986.
4. The Central Government or any officer

empowered by it in this behalf have taken samples
of air, water, soil or other substance from any
factory, premises or other place in such manner as
may be prescribed for the purpose of analysis.
5. Any person empowered by the Central

Government has carried out inspection for
determining whether any provisions of this Act or
the rules made thereunder or any notice, order,
direction or authorisation served, made, given or
granted under this Act is being or has been
complied with;
6. The company complied with the safeguard measure

as prescribed for handling any hazardous substance
7. In case of discharge of environmental pollutant in

excess of prescribed standard, the Company has
given intimation of the fact of such occurrence or
apprehension of such occurrence to all the following
authorities or agencies, namely -
(i) The officer-in-charge of emergency or
disaster relief operation in a district or
other region of a state or Union territory
specified by whatever designation by the
Government of the said State or Union
territory, and in whose jurisdiction the
industry, process or operation is located.
(ii) Central Board or a State Board as the case
may be and its regional officer having local
jurisdiction who have been delegated
powers under section 20, 21, 23 of the
Water (Prevention and Control of
Pollution) Act 1974 and section 24 of the
Air (Prevention and Control of Pollution)
Act, 1981.
(iii) The statutory authorities or agencies
specified in column 3 in relation to places
mentioned in column 2 against thereof of
the Schedule II.]

8. The Company has submitted an environmental
audit report for the financial year ending the 31st
March in Form V to the concerned State Pollution
Control Board on or before the 30th Day of
September.
The Hazardous Wastes (Management, Handling And Transboundary Movement) Rules, 2008
1. The Company generates the hazardous waste in its

establishment and engaged in handling of
hazardous wastes as specified in the Schedules to
the Hazardous Wastes (Management, Handling And
Transboundary Movement) Rules, 2008.
2. The occupier takes adequate steps for safe and

environmentally sound handling of hazardous
wastes generated in his establishment.
3. The occupier gives to the operator of a facility

information regarding disposal of hazardous wastes
as determined by the State Pollution Control Board.
4. The occupier takes all adequate steps while

handling hazardous wastes.
5. The occupier obtained authorization for handling

hazardous wastes.
6. The occupier maintains the record of hazardous

wastes handled by him in Form 3.
7. The occupier prepared and submitted to the State

Pollution Control Board, an annual return
containing the details specified in Form 4 on or
before the 30th day of June following to the financial
year to which that return relates.
8. The occupier made an application for the renewal

of an authorization in Form 1, before its expiry to
the State Pollution Control Board.

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The Water (Prevention & Control of Pollution) Act, 1974
[Read with Water (Prevention & Control of Pollution) Rules, 1975]
1. The Company has got any direction from the State

Board or any officer empowered by it for
abstracting water from any such stream or well in
the area in quantities which are substantial in
relation to the flow or volume of that stream or
well or is discharging sewage or trade effluent into
any such stream or well, to give such information
as to the abstraction or the discharge at such times
and in such form as may be specified in the
directions.
2. Whether the company complied with the direction

of State Board or any other officer empowered.
3. The State Board or any officer authorized in this

behalf have taken
(i) Samples of water from any stream or
well.
(ii) Samples of any sewage or trade effluent
passing from any plant or vessel or over
any place into any such stream or well.
4. Person authorized by the State Board have

inspected the premises of the company to
determine whether an order or direction is being
complied with or for the purposes of examining
plant, premises or any material object or for search
and seizure of any material object which may
furnish evidence of Commission of an offence
under the Act.
5. Prior Consent of the State Board under section

25 is taken (i) to set up any industry, plant or
process which is likely to discharge sewage or
trade effluent into a stream or well or sewer or on
land ;or
(i) bring into use any new or altered outlets
for the discharge of sewage; or
(ii) begin to make any new discharge of
sewage.

202
6. Any Notice has been received by the company
from state board for not taking prior consent
required as per section 25 (1) to establish any
industry , operation or process, or any treatment
and disposal system or any extension or addition
thereto, or using the new or altered outlet for
discharge of sewage or started new discharge of
sewage, as the case may be.
7. The company has received order from State Board

to remove the matter, which is, or may cause
pollution; or remedy or mitigate the pollution, or
issue prohibition orders to the concerned persons
from discharging any poisonous or noxious or
polluting matter.
8. The company has received an order under section

33 (2) restraining the company from polluting the
water in any stream or well.
9. The company has received any directions in

writing for the closure, prohibition or regulation of
any industry, operation or process; or the stoppage
or regulation of supply of electricity, or water or
any other service under section 33A.
The Air (Prevention & Control of Pollution) Act, 1981

[Read With The Air (Prevention & Control Of Pollution) Rules, 1982]
1. The Company has established any industrial plant

in an air pollution control area. If yes, whether the
company has taken previous consent of the State
Pollution Control Board.
2. The Company has made an application for consent
of the State Board under subsection (1) in the
prescribed form and the application contained the
prescribed particulars.
3. The company has got consent in writing from
the State Board.
Whether the consent given to company has been
cancelled by State Board before the expiry of the

203
period for which it is granted for non fulfilment of
conditions subject to which the consent was
granted.
4. The Company has complied with the following
conditions as laid in the consent by the State Board
namely;
(i) Installation and operation of the control
equipment of such specification as the
State Board may approve.
(ii) Alteration or replacement of the existing
control equipment if any, in accordance
with the directions of the State Board;
(iii) Keeping the control equipment referred
above in good running condition;
(iv) Erection or re-erection of Chimney,
wherever necessary of such
specifications as the State Board may
approve in this behalf;
(v) Such other conditions as the State Board
may specify in this behalf.
5. The Company has got any order from court
restraining the company discharging or causing or
permitting to be discharged the emission of any air
pollutants.
6. The Company has received any direction from the
State Board for supply of any information
(including information regarding the types of
atmosphere and the level of the emission of such
air pollutants).
7. Whether any person authorized in this behalf by
the State Board has inspected the premises of the
company for the purpose of verifying the
correctness of information supplied.
8. A State Board or any officer empowered by it in
this behalf has taken any samples of air or emission
from any chimney, flue or duct or any other outlet
for the purpose of analysis.
9. The Company is discharging or causing or
permitting to be discharged the emission of any air
pollutant in excess of the standards laid down by
the State Board under section 17(1)(g)
Dated ……………. Dated …
***

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2
11
INDUSTRY SPECIFIC LAWS
(Indicative List of Laws)
Section 204 of the Companies Act, 2013 read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, provides that every listed company and every
prescribed company shall annex with its Board’s Report, a Secretarial Audit Report, given by a
Company Secretary in Practice, in Form MR- 3.
The Council at its 226th meeting held on November 21, 2014 after deliberating on the views
that emerged from consultation meets and taking into consideration the views of members of
Corporate Laws and Governance Committee, decided that the Scope of Secretarial Audit includes:
 Reporting on compliance of five laws as mentioned in form MR-3
o Companies Act, 2013 and the rules made thereunder;
o Securities Contracts (Regulation) Act, 1956 (‘SCRA’), and the rules made
thereunder;
o Depositories Act, 1996, and the rules made thereunder;
o Foreign Exchange Management Act, 1999 and the rules and regulations made
thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment
and External Commercial Borrowings;
o Regulations and Guidelines prescribed under the Securities and Exchange Board of
India Act, 1992 (‘SEBI Act’) :-
1. The Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011;
2. The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992;
3. The Securities and Exchange Board of India (Issue of Capital and Disclosure
4. The Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999;
5. The Securities and Exchange Board of India (Issue and Listing of Debt
Securities) Regulations, 2008;
6. The Securities and Exchange Board of India (Registrars to an Issue and
Share Transfer Agents) Regulations, 1993 regarding the Companies Act and
dealing with client;
7. The Securities and Exchange Board of India (Delisting of Equity Shares)
Regulations, 2009; and
8. The Securities and Exchange Board of India (Buyback of Securities)
Regulations, 1998.

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 Reporting on compliance of secretarial standards issued by the Institute of Company
Secretaries of India;
 Reporting on Compliances with the Listing Agreement;
 Reporting on compliance of ‘Other laws as may be applicable specifically to the company’
which shall include all the laws which are applicable to specific industry for example for
Banks- all laws applicable to Banking Industry; for insurance company-all laws applicable to
insurance industry; likewise for a company in petroleum sector- all laws applicable to
petroleum industry; similarly for companies in pharmaceutical sector, cement industry etc.;
 Examining and reporting whether the adequate systems and processes are in place to
monitor and ensure compliance with general laws like labour laws, competition law,
environmental laws;
 Examining and reporting specific observations / qualification, reservation or adverse
remarks in respect of the Board Structures/system and processes relating to the Audit
period;
 In case of financial laws like tax laws and Customs Act etc., Secretarial Auditor may rely on
the Reports given by statutory auditors or other designated professionals.
Other laws as may be specifically applicable to the company (point (vi) as per MR-3)*
For the benefit of members, the Institute is developing a list of various laws specifically
applicable to companies in different sectors. An indicative list of sector specific central laws in
respect of some of the sectors is placed below for reference.
The proposed Secretarial Standard on Meetings of Board of Directors (SS-1) requires that the
list of laws applicable to the company be placed as an item of agenda at the first meeting of the
Board in the financial year.
INDICATIVE SECTOR WISE LIST
1. PHARMACEUTICAL INDUSTRY
 Pharmacy Act, 1948
 Drugs and Cosmetics Act, 1940
 Homoeopathy Central Council Act, 1973
 Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954
 Narcotic Drugs and Psychotropic Substances Act, 1985
 Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974
 The Medicinal & Toilet Preparations ( Excise Duties) Act, 1955
 Petroleum Act 1934
 Poisons Act 1919
 Food Safety And Standards Act, 2006
 Insecticides Act 1968
 Biological Diversity Act, 2002
 The Indian Copyright Act, 1957

206
 The Patents Act, 1970
 The Trade Marks Act, 1999
2. COMPUTER PROGRAMMING, CONSULTANCY AND RELATED SERVICES
 The Information Technology Act, 2000
 The Special Economic Zone Act, 2005
 Policy relating to Software Technology Parks of India and its regulations
 The Indian Copyright Act, 1957
 The Patents Act, 1970
 The Trade Marks Act, 1999
3. GAS INDUSTRY
 The Petroleum Act, 1934
 Petroleum and Minerals Pipelines (Acquisition of Right of User Inland) Act, 1962
 Explosives Act, 1884
 The Oilfield ( Regulation & Development) Act , 1948
 Petroleum and Natural Gas Regulatory Board Act, 2006
 The Oil Industry( Development) Act 1974
 The Mines Act, 1952
4. OIL & PETROLEUM SECTOR
 Petroleum and Minerals Pipelines (Acquisition of Right of User Inland) Act, 1962
 The Oilfield ( Regulation & Development) Act , 1948
 Petroleum and Natural Gas Regulatory Board Act, 2006
 The Oil Industry( Development) Act, 1974
 The Mines Act, 1952
 Mines and Minerals (Regulations and Development) Act, 1957
 The Territorial Waters, Continental Shelf, Exclusive Economic Zone And Other
Maritime Zones Act, 1976
 Offshore Areas Minerals (Development and Regulation) Act, 2002
5. POWER
 The Electricity Act, 2003
 National Tariff Policy
 Essential Commodities Act, 1955

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 Mines Act, 1952 (wherever applicable)
 Mines and Mineral (Regulation and Development) Act, 1957 (wherever applicable)
6. SUGAR INDUSTRY
 Sugar Cess Act, 1982
 Levy Sugar Price Equalisation Fund Act, 1976
 Essential Commodities Act,1955
 Sugar Development Fund Act, 1982
 Export (Quality Control and Inspection) Act, 1963
 Agricultural and Processed Food Products Export Act, 1986
7. TOBACCO INDUSTRY
 Tobacco Board Act, 1975
 Tobacco Cess Act, 1975
 Beedi and Cigar Workers (Conditions of Employment) Act, 1966 as amended in 1993
 Beedi Workers Welfare Cess Act, 1976
 Beedi Workers Welfare Fund Act, 1976
 Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation
of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COPTA)
 The Cable Television Network (Regulation) Act, 1955
8. INSURANCE
 Insurance Act, 1938
 Insurance Regulatory and Development Authority Act, 1999
 General Insurance Business (Nationalisation) Act, 1972
 Industrial Disputes (Banking and Insurance Companies) Act, 1949
 Marine Insurance Act, 1963
9. COMMERCIAL BANKS (OTHER THAN NATIONALISED BANKS AND STATE BANK OF
INDIA)
 Reserve Bank of India Act, 1934
 Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002
 The Bankers' Books Evidence Act, 1891
 Recovery of Debts due to Banks & Financial Institution Act, 1993
 Credit Information Companies (Regulation) Act, 2005

208
 Prevention of Money Laundering Act, 2002
 The Deposit Insurance and Credit Guarantee Corporation Act, 1961
 Industrial Disputes (Banking and Insurance Companies) Act, 1949
 Information Technology Act, 2000
10. BEVERAGES (NON- ALCOHOLIC)
 Food Safety and Standards Act, 2006
 The Insecticide Act, 1968
 Export (Quality Control and Inspection) Act, 1963
 Inflammable Substances Act,1952
 Agricultural and Processed Food Products Export Cess Act, 1986
 Agricultural Produce ( Grading and Marking ) Act, 1937
11. REAL ESTATE SECTOR
 Housing Board Act, 1965
 Transfer of Property Act, 1882
 Building and Other Construction Workers’ (Regulation of Employment and Conditions
of Services) Act, 1996
12. AUTOMOBILE
 Motor Vehicles Act, 1988
 The Motor Transport Workers Act, 1961
 The Explosive Act, 1884
 The Environment (Protection) Act, 1986
 The Water( Prevention and Control of Pollution) Act, 1974
 The Air( Prevention and Control of Pollution) Act, 1981
13. AVIATION SECTOR
 Aircraft Act, 1934
 Airports Authority of India Act, 1994
 Carriage by Air Act, 1972
 Tokyo Convention Act, 1975
 Anti-Hijacking Act, 1982
 Suppression of Unlawful Acts against Safety of Civil Aviation Act, 1982
 Airports Economic Regulatory Authority of India Act,2008

209
14. HUMAN HEALTH SECTOR
 Clinical Establishment (Registration and Regulation) Act, 2010
 Indian Medical Council Act, 1956
 Indian Medical Degrees Act, 1916
 Indian Nursing Council Act, 1947
 The Dentists Act, 1948
 Rehabilitation Council of India Act, 1992
 Drugs and Cosmetic Act, 1940
 The Drugs Control Act, 1950
 Pharmacy Act, 1948
 Narcotics and Psychotropic Substances Act, 1985
 Homoeopathy Central Council Act, 1973
 Insecticide Act, 1968
 Transplantation of Human Organs Act, 1994
 Drugs and Magic Remedies (Objectionable) Advertisements Act, 1954
 Birth and Death and Marriage Registration Act, 1886
 Mental Health Act, 1987
 Ear Drums and Ear Bones (Authority for Use For Therapeutic Purposes) Act, 1982
 Eyes (Authority for Use For Therapeutic Purposes) Act, 1982
 The Epidemic Disease Act 1897
15. MINING OF METAL ORES
 Mines Act, 1952
 Mines and Minerals (Development and Regulation) Act, 1957
 Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess
Act, 1976
 Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Fund
Act, 1976
16. EDIBLE OILS
 National Oil Seeds and Vegetable Oils Development Board Act, 1983
 Cotton Copra and Vegetable Oils Cess (Abolition) Act, 1987
 Seeds Act, 1966
 Protection of Plant Varieties and Farmers Right Act, 2001

210
17. ROAD TRANSPORT
 National Highways Act, 1956
 The Multimodal Transportation of Goods Act, 1993
 Control of National Highways (Land and Traffic) Act, 2002
 Carriage by Road Act, 2007
 Road Transport Corporations Act, 1950
 Motor Vehicles Act, 1988
Note : The Institute with a view to facilitate the members to conduct Secretarial Audit has
compiled list of specific Central Acts applicable to various sectors. The list is indicative only and not
exhaustive.
It may so happen that some of the sector specific laws do not figure in this list. Members are
advised to use their own professional judgement and resources in identifying other sector specific
Laws/ Rules/ Regulations/ Guidelines/ Orders/ Amendments/ Standards/Policies, as well as State
Laws, while conducting Secretarial Audit.
***

211
12
BOARD PROCESSES
Introduction
Directors, collectively called Board of Directors, in fulfilling the fiduciary objectives need to
ensure that the company adheres to transparent, ethical and responsible governance of the
company. It is, therefore, important that the Board processes of the company are robust.
They can be broadly divided into two parts namely:-
1. Part A – Board Structure
2. Part B – Board Systems and Procedures
PART A – BOARD STRUCTURE
The expression covers various attributes and dimensions of boards ranging from size and
diversity to balancing of various interests and independence. The Board structure can further be
divided as under:
BOARD STRUCTURE
A.1 Size and Composition of Board
S.No. Contents Remarks
Size and Composition of Board
1 Check that the minimum number of directors in a private company

is 2 and public company is 3
2 Check that the maximum limit of number of directors is restricted
to fifteen, In case the company has exceeded the maximum limit
has it passed special resolution for the same and has filed form
MGT-14 with ROC within 30 days from the passing of special
resolution.
3 In case the company is a listed public company check for optimum
combination of executive and non-executive directors, whether
the Board of Directors comprise of not less than fifty percent non-
executive directors (NEDs) and atleast one woman director.
4 In case the company falls under following category, check that the
company has appointed at least one woman director-
(i) every listed company;
(ii) every other public company having -
(a) paid–up share capital of one hundred crore
rupees or more; or
(b) turnover of three hundred crore rupees or more.

212
5 In case the company is a listed public company check :
Where the Chairman of the Board is a NED, at least one-third of
the Board comprises of independent directors.
Where the company does not have a regular non-executive
Chairman, at least half of the Board comprises of independent
directors.
Where the regular non-executive Chairman is a promoter of the
company or is related to any promoter or person occupying
management positions is at the Board level or at one level below
the Board, at least one-half of the Board of the company consists
of independent directors.
6 In case the company falls under following category check if

company has appointed at least two directors as independent
directors:
(i) the Public Companies having paid up share capital of
ten crore rupees or more; or
(ii) the Public Companies having turnover of one hundred
crore rupees or more; or
(iii) the Public Companies which have, in aggregate,
outstanding loans, debentures and deposits,
exceeding fifty crore rupees:
(iv) in case a company covered under the relevant rule is
required to appoint a higher number of independent
directors due to composition of its audit committee,
such higher number of independent directors shall be
applicable to it.
7 Ensure that all the independent directors meet the qualifying

criteria, for the purpose check the declaration given by every
independent director to the board.
8 Check the formal letter of appointment given to independent

directors and the terms and conditions of appointment are
available on company’s website.
As per Companies Act, 2013
An independent director shall not be entitled to any stock option
and may receive remuneration by way of fee, reimbursement of
expenses for participation in the Board and other meetings and
profit related commission as may be approved by the members.
As per Clause49 of the Listing Agreement:
Check that all fees / compensation, if any paid to non-executive
directors, including independent directors, has been fixed by the

Board of Directors and previous approval of shareholders in
general meeting has been accorded. Ensure that the shareholders’
resolution specifies the limits for the maximum number of stock
options that can be granted to non-executive directors, in any
financial year and in aggregate. The independent directors are not
entitled to any stock exchange.
Where the sitting fees payable to the non-executive directors
exceeds the limit prescribed under the Companies Act, 2013 check
that prior approval of shareholders in general meeting has been
obtained.
9 In case of a listed company check if small shareholders have

demanded that their representative should be elected to the
Board upon notice of not less than one thousand small
shareholders or one-tenth of the total number of such
shareholders, whichever is lower, at least 14 days before the
meeting.
If yes ensure that one person who himself is a small shareholder
is elected as a director by small shareholders.
10 Check the declaration of his independence where such director is

treated as independent director that he satisfies the criteria of
independent director.
11 Check that such director representing small shareholders is not

subjected to retirement by rotation and he is not holding such
position in more than two companies. Check whether the second
company in which he was appointed is not in conflict or
competition with the business of first company.
Check that the person is not appointed as such for a period
exceeding three consecutive years.
12 Check that at least one director of the company has stayed in
India for a total period of not less than 182 days in previous
calendar year. The first 'previous calendar year' for compliance
with these provisions would be Calendar Year 2014. The period
to be taken into account for compliance with these provisions will
be the remaining period of calendar year 2014 (i.e. 1st April to
31st December), on a proportionate basis, the number of days for
which the director(s) would need to be resident in India, during
Calendar Year 2014, shall exceed 136 days.
BOARD SYSTEMS AND PROCEDURE
13 Check that the company held its first meeting in 30 days of
incorporation and a minimum number of four meetings of its
Board of Directors during the year in such a manner that there
was gap of not more than one hundred and twenty days between
two consecutive meetings of the Board.

14 Check that the notice in writing was sent to every director at his
address registered with the company either by hand delivery or
by post or by electronic means at least seven days prior to the
meeting.
In case meeting of the Board was called by giving not less than
seven days’ notice ensure that at least one independent director,
if any, was present at the meeting.
In case of absence of independent directors from such a meeting
of the Board, check that decisions taken at such a meeting were
circulated to all the directors and are ratified by at least one
independent director, if any.
15 If the company provides audio-visual facility, check that the

notice of the meeting informs that the directors regarding the
option available to them to participate through video
conferencing mode or other audio visual means, and also provide
information on all the necessary information to enable the
directors to participate through video conferencing mode or
other audio visual means.
16 Check that following matters were not dealt through video

conferencing or other audio visual means in board meeting:
(i) the approval of the annual financial statements;
(ii) the approval of the Board’s report;
(iii) the approval of the prospectus;
(iv) the Audit Committee Meetings for consideration of
financial statement including consolidated financial
statement, if any, to be approved by the Board under
section 134(1); and
(v) the approval of the matter relating to amalgamation,
merger, demerger, acquisition and takeover.
17 Check that the quorum for a meeting of the Board of Directors of a

company was satisfied i.e. one third of its total strength or two
directors, whichever is higher, and the participation of the
directors by video conferencing or by other audio visual means
was also counted for the purpose of quorum.
18 Check that the independent directors of the company held at least

one meeting in a year, without the attendance of non-
independent directors and members of management.
19 Check that in separate meeting of independent directors they

reviewed the performance of non-independent directors and the
Board as a whole and reviewed the performance of the

Chairperson of the company, taking into account the views of
executive directors and non-executive directors and to assess, the
quality, quantity and timeliness of flow of information between
the company management and the Board members that is
necessary for the Board to effectively and reasonably perform
their duties.
20 Check that every listed company and every other public company
having a paid up share capital of twenty five crore rupees or more
calculated at the end of the preceding financial year has in its
Board’s report made a statement indicating the manner in which
formal annual evaluation has been made by the Board of its own
performance and that of its committees and individual directors.
21 Check that every director discloses his concern or interest in any

company or companies or bodies corporate (including
shareholding interest), firms or other association of individuals,
by giving a notice in writing in Form MBP 1,at the first meeting of
the Board in which he participates as a director and thereafter at
the first meeting of the Board in every financial year or whenever
there is any change in the disclosures already made. Check
whether form MGT-14 is filed within 30 days of passing of board
resolution in respect of such disclosure.
22 Ensure that interested director did not participate when such

contract or arrangement was taken up for discussion and was not
counted for the quorum for the same.
23 Check that all material transactions with related parties have

been disclosed quarterly along with the compliance report on
corporate governance.
24 Check that the company has formulated a policy on materiality of

Related Party Transaction and also on dealing with Related Party
Transactions and the same is disclosed on its website and also in
the Annual Report.
25 In case of listed company check that the Related Party

Transactions had prior approval of the Audit Committee.In case
the audit committee has granted omnibus approval for related
party transactions proposed to be entered into by the company,
for a period not exceeding one year then all the related party
transactions were in accordance with the omnibus approval.
26 All Related Party Transactions covered under rule 15(3) of the

Companies (Meetings of Board and its Powers) Rules, 2014 have
been approved by the shareholders through special resolution
and the related parties abstained from voting on such resolutions.
(This shall not apply to transactions between in case of wholly

owned subsidiary and holding company and between two
government companies). Check whether the company has filed
form MGT-14 with ROC within 30 days of passing special
resolution. Also check whether the company has recorded related
party transactions in the register maintained in MBP-4.
27 Check the Board periodically ensures that the systems and

processes in the company are adequately commensurate with its
size and operations to monitor and ensure compliance with
applicable laws, rules, regulations and guidelines and that such
systems and processes are operating effectively.
28 Check that the Board periodically reviews compliance reports of

all laws applicable to the company, prepared by the company as
well as steps taken by the company to rectify instances of non-
compliances.
29 Check that the Board of the company satisfies itself that plans are
in place for orderly succession for appointments to the Board and
to senior management.
The Nomination and Remuneration committee is responsible to
identify persons who are qualified to become directors and who
may be appointed in senior management in accordance with the
criteria laid down, and recommend to the Board their
appointment and removal.
30 Check that the minutes of board/ committee meetings are

properly maintained in accordance with the Act.
BOARD COMMITTEES
31 Ensure that a director is not a member in more than ten

committees or act as Chairman of more than five committees
across all companies except private companies, foreign
companies and section 8 companies, in which he is a director.
32 Check where the company falls under any of the following

categories:
(ii) all public companies with a paid up capital of ten crore
rupees or more on the date of last audited Financial
Statements;
(iii) all public companies having turnover of one hundred
crore rupees or more on the date of last audited
Financial Statements;
(iv) all public companies, having in aggregate, outstanding
loans or borrowings or debentures or deposits

exceeding fifty crore rupees or more on the date of
last audited Financial Statements.
If yes, check that the Board of directors have constituted an Audit
Committee and a Nomination and Remuneration Committee of
the Board.
33 Check that the audit committee consists of a minimum of three

directors with a majority of independent directors. In case of
listed company Two-third of the total number of members of
audit committee shall be independent directors.
Ensure that the board’s report discloses the composition of an
audit committee.
34 Check that the majority of members of Audit Committee including

its Chairperson are persons with ability to read and understand,
the financial statement.
In case of listed company all members of audit committee shall be
financially literate and at least one member shall have accounting
or related financial management expertise.
35 In case of listed company, check whether the Chairman of the

Audit Committee is an independent director and that the
Chairman of the Audit Committee was present at Annual General
Meeting to answer the queries of shareholder/s.
36 Check that the Audit Committee of the company if any, in

consultation with the Internal Auditor, has formulated the scope,
functioning, periodicity and methodology for conducting the
internal audit. Check whether the Audit Committee has authority
to investigate into points covered under Section 177(4) of the
Companies Act, 2013 and power to seek professional advice from
external sources.
37 Check where the company falls under any one of the following
categories :
(ii) a company which accepts deposits from the public;
(iii) a company which has borrowed money from banks
and public financial institutions in excess of fifty crore
rupees.
If yes, check that the company has constituted vigil mechanism for
their directors and employees to report their genuine concerns or
grievances.
38 Check that the terms of reference (in addition to other items) of

audit committee ensures overseeing the vigil mechanism of the
company.

39 In case of listed companies, check whether the details relating to
Related party transactions entered into by the company pursuant
to each omnibus approval has been placed before the audit
committee at least on quarterly basis. Check whether all the
material individual transactions, not in the normal course of
business and at, arm’s length are placed before the Audit
Committee with Management’s justification. Check whether the
management discussion and analysis statement is disclosed in the
directors’ report.
40 In case of listed company check that the Audit Committee has met
at least four times in a year and not more than four months have
elapsed between two meetings.
41 In case of listed company check that the quorum of audit
committee was maintained in all meetings i.e. either two
members. or one third of the members of the audit committee
whichever is greater, but there should be a minimum of two
independent members present.
42 Check that any recommendation of the audit committee which is
not accepted by the Board is disclosed in the Board’s report.
43 Check that the Nomination and Remuneration Committee
consists of at least three or more non-executive directors out of
which not less than one-half are independent directors.
44 Check whether the Chairman or a member of the nomination and
remuneration committee was present at the Annual General
Meeting, to answer the shareholders' queries.
45 Check whether the board’s report gives disclosure of the
remuneration policy relating to the remuneration of the directors,
key managerial personnel and other employees and the
evaluation criteria of independent directors. Check whether the
ratio of remuneration of each director to median employee’s
remuneration, percentage increase in remuneration of KMPs and
median employees, in financial year, number of employees on
role, relation between average increase in remuneration vis-a-vis
performance, key parameters of variable components in
remuneration, and such other important details are disclosed in
the board’s report. Check whether the remuneration to KMPs is as
per the remuneration policy framed by the company.
46 Check that where a company consists of more than one thousand

shareholders, debenture-holders, deposit-holders and any other
security holders at any time during a financial year has
constituted a Stakeholders Relationship Committee consisting of
a chairperson who shall be a non-executive director and such
other members as may be decided by the Board.

47 Check whether the Chairman or a member of the Stakeholders
Relationship Committee was present at the Annual General
Meeting, to answer the shareholders' queries.
48 Check whether the company has taken D & O Insurance for

managing director, independent director, whole-time director,
manager, Chief Executive Officer, Chief Financial Officer or
Company Secretary.
49 Check that every company having net worth of rupees five

hundred crore or more, or turnover of rupees one thousand crore
or more or a net profit of rupees five crore or more during any
financial year has constituted a Corporate Social Responsibility
Committee of the Board consisting of three or more directors, out
of which at least one director is an independent director.
50 Check that the board’s report discloses the details about the policy
developed and implemented by the company on corporate social
responsibility initiatives taken during the year.
51 Check that the Corporate Social Responsibility Policy for the
Company was approved by the board of directors and the
contents of such Policy are disclosed in its report and also place it
on the company's website.
52 Check that the composition of the committee is also disclosed in
the Board’s Report.
53 Check that the company has disclosed reasons for not spending
the amount for CSR in its Board’s report, if so.
54 Check that in case of listed company that it has constituted a Risk
Management Committee. Ensure that the majority of committee
members are board members and the chairman is also a board
member, senior executives may also be members of this
committee.
55 Check that the company has laid down procedures to inform

Board members about the risk assessment and minimization
procedures.
56 Check that the Board has framed, implemented and monitored

the risk management plan for the company.
57 Ensure that a statement is made w.r.t. risk management policy in

Board’s report.
58 Check that the Code of Conduct for the Board of Directors and the
senior management is disclosed on the website of the company.

59 Check the annual report for the details of familiarization
programmes for the Independent Directors shall be disclosed on
the company’s website and a web link thereto shall also be given
in the Annual Report.
60 Check that every company observes secretarial standards with

respect to conduct of Board meetings. (SS-1)
***

2
13
SPECIMEN OF QUALIFIED SECRETARIAL
AUDIT REPORT
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED ON 31ST March, 2015
[Pursuant to section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment
and Remuneration Personnel) Rules, 2014]
To,
The Members,
XYZ Limited
I/We have conducted the secretarial audit of the compliance of applicable statutory provisions
and the adherence to good corporate practices by XYZ Limited (hereinafter called the Company).
Secretarial Audit was conducted in a manner that provided me/us a reasonable basis for evaluating
the corporate conducts/statutory compliances and expressing our opinion thereon.
Based on my/our verification of the Company ’s books, papers, minute books, forms and
returns filed and other records maintained by the Company and also the information provided by
the Company, its officers, agents and authorized representatives during the conduct of secretarial
audit, I/We hereby report that in my/our opinion, the company has, during the audit period
covering the financial year ended on 31st March, 2015 complied with the statutory provisions listed
hereunder and also that the Company has proper Board-processes and compliance- mechanism in
place to the extent, in the manner and subject to the reporting made hereinafter:
I/We have examined the books, papers, minute books, forms and returns filed and other
records maintained by XYZ Limited for the financial year ended on 31st March, 2015 according to
the provisions of:
(v) The Regulations and Guidelines prescribed under the Securities and Exchange Board of
India Act, 1992 (‘SEBI Act’) viz. :-
Regulations, 1992;

Regulations, 2008;
2009; and
(vi) and other applicable laws like in case of a pharmaceutical Company, the Pharmacy Act,
1948; Drugs and Cosmetics Act, 1940; Homeopathy Central Council Act, 1973 etc.
I/We have also examined compliance with the applicable clauses of the following:
(ii) The Listing Agreements entered into by the Company with PQR Stock Exchange.
During the period under review the Company has complied with the provisions of the Act,
Rules, Regulations, Guidelines, Standards, etc. mentioned above except to the extent as mentioned
below:
1. In respect of issue of further shares, company did not pass a special resolution before
allotting shares to persons other than existing members. This is a non-compliance of section
62 of the Companies Act, 2013.
2. In respect of a acceptance of deposits, company is in the process of taking Insurance policy.
3. The Company has not filed charge created on its property for obtaining guarantees from its
bankers. The Bankers themselves can also file charge and 300 days time is given for filing
with late payment fees. If it falls under this category, then it is deemed compliance. Even
after 300 days if a condonation of delay application is made, it would be deemed compliance
of process until conditions is denied. Only when denied it will be reported as non-
compliance.
4. The Company has got two factory premises where registration under the Factories Act is
yet to be done. If in the system, application of registration surfaces, then there is adequate
system in place.
5. ………….
6. …………
I/we further report that
The Board of Directors of the Company is duly constituted with proper balance of Executive
Directors, Non-Executive Directors and Independent Directors. The changes in the composition of
the Board of Directors that took place during the period under review were carried out in
compliance with the provisions of the Act except that Form DIR 12 was filed after 30 days from the
date of resignation of Mr. X as Director. Where this form is filed with late fees, this should be
reported as compliance by reference of payment of additional fees.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed
notes on agenda were sent at least seven days in advance except in one case where notice was not
given to Mr. Y in respect of a meeting held on …, and a system exists for seeking and obtaining
further information and clarifications on the agenda items before the meeting and for meaningful
participation at the meeting.
Majority decision is carried through while the dissenting members’ views are captured and
recorded as part of the minutes.
I/we further report that there are adequate systems and processes in the company
commensurate with the size and operations of the company to monitor and ensure compliance with
applicable laws, rules, regulations and guidelines however the compliance reports were not
submitted to the Board in time and a delay of about six month was observed in informing the non
compliance in respect of Compliances under Payment of Bonus Act, Employees Provident Fund Act.
We further report that during the audit period the company has signed the technical
collaboration agreement with UVW Limited but the precise impact of such collaboration can not be
reasonably estimated for the time being. Company has received show cause notice from the
collector for nonpayment of stamp duty in respect of transfer of immovable property. Company
has filed its reply however there is a contingency that company may have to pay a sum of Rs. 50 lacs
by way of penalty.
Place: Signature:
Date : Name of Company Secretary in practice / Firm :
ACS/FCS No.
C P No.:
This report is to be read with our letter of even date which is annexed as Annexure A and
forms an integral part of this report.

‘Annexure A’
To,
The Members
XYZ Limited
--------------
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of the company.
Our responsibility is to express an opinion on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain
reasonable assurance about the correctness of the contents of the Secretarial records. The
verification was done on test basis to ensure that correct facts are reflected in secretarial
records. We believe that the processes and practices, we followed provide a reasonable
basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of
Accounts of the company.
4. Where ever required, we have obtained the Management representation about the
compliance of laws, rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations,
standards is the responsibility of management. Our examination was limited to the
verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the company
nor of the efficacy or effectiveness with which the management has conducted the affairs of
the company.
Signature:
Date:
Place:
(Name)
Practising Company Secretary
Membership No.
Certificate of Practice No.
***

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GUIDANCE NOTE

Price : Rs. 500

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

Printed at Samrat Offset Works / 1000/ March 2015

Date : 27-03-2015 CS Atul Mehta

Sl. No. Chapter Page Nos.

2 Companies Act, 2013 42

3 Capital Market related laws/Rules/Regulations 107

Part A : Securities Contracts (Regulation) Act, 1956 and Rule 107

5 Direct Investment by Resident in Joint Venture/Wholly Owned 165

6 External Commercial Borrowing 171

7 Secretarial Standards under the Companies Act, 2013 174

8 Labour Laws 176

9 Competition Law 192

10 Environmental Laws 199

11 Industry Specific Laws 205

12 Board Processes 212

13 Specimen Qualified Secretarial Audit Report 222

Genesis of Secretarial Audit

Recommendation by Parliamentary Standing Committee on Finance

Report of Parliamentary Standing Committee on Finance

1 Guidance Note on Secretarial Audit

2 Guidance Note on Secretarial Audit

3 Guidance Note on Secretarial Audit

4 Guidance Note on Secretarial Audit

5 Guidance Note on Secretarial Audit

General Principles/Guidelines while conducting Secretarial Audit

6 Guidance Note on Secretarial Audit

7 Guidance Note on Secretarial Audit

8 Guidance Note on Secretarial Audit

9 Guidance Note on Secretarial Audit

10 Guidance Note on Secretarial Audit

A perusal of the definition brings out the following elements of “Fraud”:-

11 Guidance Note on Secretarial Audit

 Excessive managerial remuneration – There were many corporate scams like

12 Guidance Note on Secretarial Audit

Inter Company transactions – Group company transactions are to be examined carefully to

 Mergers/demergers/acquisitions – In many scams relating to acquisitions fraud in

13 Guidance Note on Secretarial Audit

14 Guidance Note on Secretarial Audit

15 Guidance Note on Secretarial Audit

16 Guidance Note on Secretarial Audit

17 Guidance Note on Secretarial Audit

18 Guidance Note on Secretarial Audit

19 Guidance Note on Secretarial Audit

20 Guidance Note on Secretarial Audit

Particulars As on Add: Increase Less: Reduction Date of passing Capital as on

21 Guidance Note on Secretarial Audit

22 Guidance Note on Secretarial Audit

23 Guidance Note on Secretarial Audit

b. Annual/Extra Ordinary General Meeting

c. Committee Meeting Audit/Nomination & Remuneration/etc.)

24 Guidance Note on Secretarial Audit

6. KEY MANAGERIAL PERSONNEL

25 Guidance Note on Secretarial Audit

Name of Charge Id Date of Amount of Security Whether any Date of Remarks

a) Detailed list of Loans and Advances given by the

b) Whether there are any relatives of directors/

c) Complete list of unsecured loan taken by the

26 Guidance Note on Secretarial Audit

a) Whether company has made any foreign investment or

b) Whether company has filed annual statement related to Foreign